A free-market energy blog
Random header image... Refresh for more!

Wind Jobs at PTC Risk: Not 37,000 per AWEA but 2,525 (these million-dollar jobs displace real jobs, too)

“The Congressional Joint Committee on Taxation, for example, has estimated that the cost of a one-year PTC extension is $12.1 billion. Thus, even accepting the Report’s grossly inflated number of 37,000 wind jobs, the cost to the American taxpayers would be $12.1 billion divided by 37,000, or about $327,000 per job. [But] … the cost for a one-year PTC extension could be as much as a staggering $4,792,079 per direct up-front job added ($12.1 billion ÷ 2,525 jobs).”

An intellectual nail has been driven into the wind-industry-driven Production Tax Credit, a governmental lifeline keeping an inherently flawed industry afloat. The new study, Inflated Numbers; Erroneous Conclusions: The Navigant Wind Jobs Report, was authored by Charles J. Cicchetti, a noted economics consultant and longtime economics professor (now adjunct) at the University of Southern California.

Dr. Cicchetti is also senior advisor to Navigant Consulting, the consulting firm that released the disputed study under review.

The remainder of this post highlights parts of the study (in blue).

Bad Assumptions

The study’s key findings include:

  • When calculating potential job losses, Navigant used the wind industry’s self-serving, inflated forecasts for wind capacity “lost” without the PTC, which exceeded the federal government’s non-biased forecasts by as much as 55%.
  • Navigant’s analysis also incorrectly applied one model to determine direct job losses in key states, inflating them by at least 100%. Incorrectly applying another model resulted in questionable multipliers that inflated job loss estimates by at least another 72%.
  • The Navigant report narrowly focuses on supposed jobs lost in the wind industry if the PTC isn’t extended but completely ignores the U.S. economy as a whole. If new generating capacity is needed and jobs are the measure, other sources of electricity, such as coal, nuclear power or natural gas, would create more direct jobs than wind power for an equal amount of new generating capacity. In a separate May 2010 report, Navigant actually acknowledged that wind power produces fewer jobs, direct and indirect, than other sources of electricity for an equivalent amount of capacity.
  • Subsidizing wind is very costly per job created. A one-year PTC extension could cost as much as a staggering $4.8 million for each direct wind manufacturing and construction job added.

Economics 101 Corrections

“Navigant’s job creation methodology never asks: ‘Compared to what?’ Wind is not the only choice…. If 20,200 MWs of generating capacity were actually needed, based on Navigant ’s own methodology, alternative generation and plant life-extensions would add more jobs than wind.”

Cost per ‘Saved’ Job

“The Congressional Joint Committee on Taxation, for example, has estimated that the cost of a one-year PTC extension is $12.1 billion. Thus, even accepting the Report’s grossly inflated number of 37,000 wind jobs, the cost to the American taxpayers would be $12.1 billion divided by 37,000, or about $327,000 per job. [But realistically given this study's correction] … the cost for a one-year PTC extension could be as much as a staggering $4,792,079 per direct up-front job added ($12.1 billion ÷ 2,525  jobs).”

Bubble Jobs

‘Under any circumstances, however, using energy policy to create jobs is inefficient, and is even worse when policy attempts
to pick the “winners” as it does with the PTC. Rather than continuing to subsidize wind with the expensive PTC, if additional
generation resources are needed the more economic approach would be for providers to invest to extend the life of nuclear and
hydroelectric facilities, reduce pollution at coal-fired units, and build conventional generation.” (p. 6)

Conclusion

“Using energy policy to create jobs is never cost effective and is especially bad policy when used to pick “winners” by providing
extraordinarily expensive subsidies like the PTC. Moreover, under any circumstances, the Report’s wind capacity and job loss
numbers have no credibility and should not be relied on to support any further extensions of the PTC. The Report’s numerous
calculation errors included:

• Using biased, self-serving industry forecasts and estimates, which created “lost” wind MWs estimates that are between 20%
and 55% higher than impartial government wind capacity forecasts.

• Incorrectly using the JEDI model, which alone inflated job losses by at least 100% in the key states that were reviewed.
Incorrectly applying the IMPLAN model using questionable multipliers, which inflated job losses by at least another 72%.

• Failing to consider other generating technologies that have greater job gains than wind per unit of capacity.

Given these numerous flaws the Report’s job loss numbers are meaningless and provide no support for extending the PTC.
Rather, extending the PTC will unnecessarily cost taxpayers billions of dollars and will not create any net American jobs. To the
contrary, extending the PTC will reduce, not increase, American jobs.”

5 comments

1 Jon Boone { 03.08.13 at 2:21 pm }

As I once wrote in this forum, “Every major claim made by those who would profit, either financially or ideologically, from wind technology is replete with Owellian blackwhite doublespeak. Despite the promise of many jobs in the USA, for example, wind provides a relative piffle of full time direct employment while most wind manufacturing has migrated to China.” And as I also showed in another post, the number of full time wind jobs in Minnesota number far less than 100, despite the billions of dollars expended there to construct wind facilities. In 2008, AWEA promised the state a new wind manufacturing plant that has never eventuated; but this has been a common ploy in many states of the United States of Amnesia to coax subsidies from both those states and Congress.

Even years ago it was easy to show, using wind developers’ own language, how few permanent jobs the “industry” actually created. One of the more blatant bits of wind puffery had (has) to do with claiming that the technology, although admittedly encumbered with high capital costs, had the lowest operating costs, given the nature of its fuel and the fact that so few jobs were required to maintain the equipment. This remains of course the basis for the idea that wind, once built, is essentially “free.” So, yes, even a little thought about wind jobs shows how few they were (are) before the fact.

After the fact, it was rather easy to examine existing wind plants, revealing how few permanent jobs actually were on the books. New York is instructive here. Iowa is even more telling.

Manufacturing, accounting, sales, and legal work that figure in wind’s job totals are very hard to pinpoint, since virtually all such jobs for wind are subsumed or shared within other enterprise. The manufacture of ball bearings and engine fittings are dispersed around the world and are largely part of the manufacture of parts for other industrial machines that it’s difficult to separate wind work from everything else.

Moreover, the 700 direct wind manufacturing jobs claimed for Iowa have been extremely difficult to document, given the frequent layoffs and the blurring between full and part time staff. A good guess for FTE totals would be not much more than 200 in the manufacturing sector and not much more than 100 in maintenance, security. 300 jobs is nothing to sneeze about in Iowa, subsidized as they are by everyone else.

So Navigant’s nearly $5 million cost estimate to create each direct wind job, including temporary construction crews, is likely extremely conservative.

This being said, however, no one should think current wind subsidies are the result of false promises of jobs. Over the two decades of its massive public support, every time the wind business has confronted a fork in the subsidy road, it took it–by making any promise it knew it could not keep, including the mitigation of global warming, the prevention of asthma, the closing of coal mines, the powering of many thousands of homes, the addition of significant local revenues, etc.

A major reason wind welfare remains a staple in the public trough has much more to do with how Congress operates, with its Byzantine opaque committee processes, where a handful of Congressional leadership makes decisions about who gets what when, after which the goodies are doled out with little public scrutiny to buy political support for all. This is abetted by the way very powerful senators and congressmen are able to tax the entire nation to support an influential “business” in a local barnyards. Take a bow Chuck Grassley, Chuck Hagel, John Thune. among many others….

But the real reason wind continues to spread its porcine wings has much to do with how Congressional and state subsidies line the pockets of so many around the political and economic landscape, including virtually all the Big Energy companies now so heavily invested in wind, many too-big-to-fail financial institutions (you know who you are), and corporations like GE/NBC and GM, which make money directly, via wind tax sheltering, and through extensive leveraging.

The wind bonds among Barack Obama, George W Bush, Karl Rove, Hilary Clinton, Colin Powell, Herman Cain, etc, etc, etc throughout the nation’s political celebrity A-lists, are enough to gag a maggot. They share in Enron’s legacy by making electricity seem to be a scarce resource–and keeping things that way by reaping what they sow.

2 Catherine Bayne { 03.09.13 at 6:29 pm }

The Auditor General for Ontario, in his 2011 Report on renewable energy revealed:

Although the Ministry consulted with stakeholders in developing the supply-mix directives, the LTEP, and the Green Energy and Green Economy Act, billions of dollars were committed to renewable energy without fully evaluating the impact, the trade-offs, and the alternatives through a comprehensive business-case analysis. Specifically, the OPA, the OEB, and the IESO acknowledged that:
• no independent, objective, expert investigation had been done to examine the potential effects of renewable-energy policies on prices, job creation, and greenhouse gas emissions; and
• no thorough and professional cost/benefit analysis had been conducted to identify potentially cleaner, more economically productive, and cost-effective alternatives to renewable energy, such as energy imports and increased conservation.

These are truths we long suspected and they are precisely stated; carefully phrased proof that our United Nations-declared environmental human rights were violated, yet the propaganda machine just crazily churned out more fictitious job numbers to justify the huge Feed-in-Tariff subsidies.

On the shores of Lake Superior where the wilderness allure of the minimally impacted watershed is the basis for our sustainable tourism economy we have had the experience of both hydro dams and wind farm development which bear out Dr. Cicchetti’s conclusion: “Using energy policy to create jobs is never cost effective and is especially bad policy when used to pick “winners” by providing extraordinarily expensive subsidies like the PTC.

The sparsely staffed hydro-electric facilities are at least reliable and low-profile whereas the 128 Industrial Wind Turbines blight the landscape for 50km and employ a mere handful of permanent workers. There can be no valid comparison between the government’s imaginary jobs and the real family tourism businesses which will suffer under the onslaught of more industrial wind developments.

3 Charles { 03.09.13 at 7:14 pm }

‘Wind welfare’, I love that! Outstanding encapsulation of a rent-seeking industry.

4 Weekly Climate and Energy News Roundup | Watts Up With That? { 03.11.13 at 10:25 am }
5 Nice Work if You Can Get it… | kootenaybob { 03.13.13 at 11:08 pm }

[...] Green Jobs – $4,792,079 per… An intellectual nail has been driven into the wind-industry-driven Production Tax Credit, a governmental lifeline keeping an inherently flawed industry afloat. The new study, Inflated Numbers; Erroneous Conclusions: The Navigant Wind Jobs Report, [...]

Leave a Comment