“AWEA’s job figures, dating back to at least 2009, may be nothing more than figures pulled from thin air.”
The numero uno goal of the American Wind Energy Association (AWEA) is extending the Production Tax Credit (PTC) beyond its current expiration date of December 31, 2012. Documents available on the trade group’s website show that about $4 million of AWEA’s 2012 budget ($30 million) was directed toward PTC lobbying.
With job growth the top political issue in this election season, AWEA’s strategic plan calls for rebranding of the wind industry as an economic engine that will produce steady job growth, particularly in the manufacturing sector. But therein lies a problem: the wind industry’s own record on job growth lacks credibility.
Public information suggests that AWEA has inflated its overall job numbers.
Section 1603 Job Inflation
Seventy-five percent of the Section 1603 largesse was lavished on big wind, yet, despite billions of taxpayer dollars, this sector experienced a loss of 10,000 direct and indirect jobs in 2010. This lowers AWEA’s reported total to 75,000 jobs. [1]
In April, the DOE subsidiary National Renewable Energy Laboratory (NREL) released its estimates of direct and indirect jobs created by wind projects receiving 1603 funding. The agency relied on the JEDI (‘Jobs and Economic Development Impacts’) model to estimate gross jobs, earnings, and economic output supported through the construction and operation of large wind projects.
But an investigation by the House Subcommittee on Oversight and Investigations rightly objected to NREL’s conclusions. The Subcommittee found that NREL overstated the number of jobs created under 1603, that it failed to report on the more important net job creation, and ignored potential jobs that would be created given alternative spending of federal funds. The key sticking point was that NREL did not validate its models using actual data from completed projects.
The Subcommittee concluded that models like JEDI which are used to estimate job creation were no substitute for actual data and added:
The Section 1603 grant program was sold to the American people as a necessary stimulus jobs program, and yet, the Treasury and Energy Departments do not have the numbers to back up the Obama Administration’s claims of its success in creating jobs.
JEDI Magic
Since NREL’s JEDI model provides a gross analysis only, it does not consider how building a renewable energy facility might displace energy or associated jobs, earnings, and output related to other existing or planned energy generation resources (e.g., jobs lost or gained related to changes in electric utility revenues and increased consumer energy bills, among other impacts).
In other words, the model is one-sided, considering only the benefit side of a cost-benefit comparison and ignoring everything else. That violates an old principle of economics, to see not only the seen but the unseen, as described in Economics in One Lesson by Henry Hazlitt:
The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.
To use the favorite analogy of economists, it is as if someone breaks a window and jobs are counted only from replacing the window, neglecting how the resources would have been spent if not diverted to repair damage. Hence the name for the JEDI misdirection: the broken window fallacy.
Validating AWEA Job Data
So what real data do we have on wind industry jobs? The answer is Not much. Apparently, AWEA is the only source of nationwide employment statistics in the United States for wind-related jobs.
Of the purported 75,000 direct and indirect jobs, the majority (around 60%) work in finance and consulting services, contracting and engineering services, and transportation and logistics. Twenty thousand are employed in wind-related manufacturing, with the remaining jobs tied to construction and O&M.
But validating this information is not possible since no industry codes exist that isolate wind power establishments or wind turbine and wind components establishments. The North American Industry Classification System (NAICS) bundles wind-related manufacturers under the same code as the “Turbine and Turbine Generator Set Units” manufacturing industry (NAICS 333611), which includes “establishments primarily engaged in manufacturing turbines (except aircraft) and complete turbine generator set units, such as steam, hydraulic, gas, and wind.”
At the end of 2010, the Bureau of Labor Statistics reported 26,218 total jobs in this industry. It’s not credible that AWEA’s estimated manufacturing jobs could represent the vast majority of employment under the NAICS 333611 classification. [2]
Navigant Conjuring (Twice!)
In December, AWEA commissioned Navigant Consulting Inc. to study the impact of the PTC on job growth in the wind industry. The study, also based on the JEDI model, considered two scenarios, one where the PTC is extended for four years (2013–2016); the other where the PTC expires at the end of this year.
Part I: Navigant’s model showed that extension of the PTC would provide a stable economic environment and allow the wind industry to grow to nearly 100,000 American jobs over four years, including a jump to 46,000 manufacturing positions. Expiration of the PTC showed a loss of 37,000 jobs.
The message to Congress was clear: extend the PTC or you will be blamed for American jobs being lost. Even Interior Secretary Salazar peddled AWEA’s numbers despite the Congressional report that raised doubts about the JEDI model behind it.
Part II: Recent statements by AWEA prompted us to look at the numbers even further. In May, AWEA’s Denise Bode told Windpower Monthly that of the estimated 75,000 wind jobs, at least 30,000 were manufacturing jobs — a 10,000 jump!
Where did the additional manufacturing jobs come from? As it turns out, Navigant tabulated direct and indirect jobs but also quietly added INDUCED jobs — those jobs created when the overall level of spending in an economy rises due to workers newly receiving incomes.
Factoring in ‘induced employment’ was a radical departure from job figures previously provided by AWEA. “Induced” job figures are more abstract and inherently unreliable but a convenient way to inflate job numbers. We could find no documentation that explained this change in job reporting, nor was the change footnoted in the Navigant study.
We spoke with a Navigant representative who suggested AWEA might have been incorrectly treating ‘induced jobs’ as ‘indirect jobs’ in its prior reports, but that would not explain the inflation in manufacturing jobs. Total job counts would have stayed about the same.
In looking at the Navigant modeled numbers, it appears the wind industry currently provides only 58,000 direct and indirect jobs, not 75,000. A four-year extension of the PTC could result in a possible 70,000 direct and indirect jobs by 2016 (scenario 2) — 5,000 less than the number AWEA touts today!
Conclusion
The above analysis does not even account for wind jobs that have already been lost from the political uncertainty that engulfs the industry. These workers, no doubt, will be lost to wind forever as they migrate to where the real energy action is–the consumer-driven oil and gas industries that have job-wanted signs out.
The change in job counts raises serious credibility issues about the industry’s employment strength. But the absolute numbers tell only a piece of the story. Since Navigant’s study is based on JEDI, the job figures represent gross numbers and do not consider them in the context of the larger economy. In that sense, Navigant’s findings, like NREL’s study, tell us nothing about the true impact of the PTC.
But one thing does appear to be true: AWEA’s job figures, dating back to least 2009, may be nothing more than figures pulled from thin air.
—————————————–
[1] Lawrence Berkeley National Laboratory reports (p. 7): “The American Wind Energy Association, meanwhile, estimates that the entire wind energy sector directly and indirectly employed 75,000 full-time workers in the United States at the end of 2010 – about 10,000 fewer full-time-equivalent jobs than in 2009, mostly due to the decrease in new wind power plant construction.” A recent AWEA blog (February 3, 2012) confirms the 75,000 is still current.
[2] Wind manufacturing represents around one-half of one percent of the 11.5 million domestic manufacturing jobs in 2010.
Two observations:
1. “Apparently, AWEA is the only source of nationwide employment statistics in the United States for wind-related jobs.” As the House committee concluded, though, “the Treasury and Energy Departments do not have the numbers to back up the Obama Administration’s [and AWEA’s] claims of its success in creating jobs.” Yet another take on the “there’s no there there” wind routine.
By lumping together direct, indirect, and, evidently, “induced” jobs, AWEA at least triply masks the truth about the wind industry’s overall employment reality. The salient question should be how many full time permanent (with an expectation of ten years, say, the length of wind’s Congressional production tax credit duration) jobs has the industry created that reside in the USA.
Since most of wind manufacturing takes place in other parts of the world; since financial and consulting services can take place in the Internet ether, requiring no national domicile; since O&M employees are dwarfed by temporary construction crews (most members of which, for insurance purposes, are from other countries), where the ratio typically exceeds 1:10; and since contracting and engineering are typically formulaic services, where one firm can handle many projects–the actual number of full time wind jobs in the US likely comes to between 5000 to 8000 employees–and even these numbers are a stretch. When divided by the scores of billions of subsidy dollars, the per capita cost to produce wind jobs is astronomical.
2. As suggested here, the wind as job creator scenario is essentially a PR ploy conjured to float AWEA’s Congressional subsidy boat. Not that long ago, this insipid organization and its minion of supporters were speaking out of the other side of their mouths. Knowing that the capital cost of a wind project, on a kWh production basis, was equivalent to that of a nuclear plant, AWEA touted instead the low cost of its projects’ operation and maintenance, made possible in large part because its O&M labor force, typically an expensive factor for most conventional plants, was so small. Once constructed, according to AWEA, a wind facility was basically “free.”
As with virtually every other claim made for this daffy enterprise, which are typically accompanied by punditry-writ projections like JEDI that have little to do with reality, the claim about the number of wind industry jobs should be understood as yet another whiff of AWEA’s powerful odor of mendacity.
The smell is so noxious it should be regulated by the EPA….
Jobs in an artificial uneconomic industry are not helpful jobs. The bigger this job count is, the worse it is for US productivity.
The best scenario is that the subsidies end and these workers are freed from their marginally productive activity to rejoin the real free-market work force. Then they can help produce goods and services we want and need to make life better.
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“Apparently, AWEA is the only source of nationwide employment statistics in the United States for wind-related jobs.” That IS a pertinent fact to know. Thank you, Lisa. And it seems like I’ve heard something similar in other AWEA situations as well – e.g. actual wind performance, grid performance, etc. etc. How very convenient for AWEA.
When I read the AWEA strategic plan (mentioned above), there was something else besides the PTC jobs study which caught my eye in regards to Navigant Consulting. Since Lisa’s has touched on “Navigant Conjuring” in her article, I’ll just throw this out there as a little food for thought:
On page 39 of this document, it says:
“• AWEA is participating as an unpaid advisor on two projects led by Navigant Consulting for which Navigant team has won grants from Department of Energy: (1) annual market report on offshore wind for three years and (2) one-time domestic supply chain assessment.”
This very well could be just me — but when I read the bit about Navigant’s PTC jobs study and then this part about AWEA being an “unpaid” advisor to Navigant, the word that came to my mind was: cozy.
AWEA’s relationships to Navigant and other political elites is more than “cozy.” I’d call it incestuous and criminal – among others not suitable for print.
Here in Wyoming County of Western New York State, there have been only a very few local minimum wage jobs left in the wake of the six-month installation phase of these giant bird Cuisanarts.
Trying to justify their own six-figure salaries, the Wyoming County IDA just published a Press Release claiming that the money they were receiving from the wind projects is what is enabling them to dole out money to other businesses in the County — the latest in make-believe “Green Jobs” creation numbers. Meanwhile, the entire County has been devalued, and all that’s left in Big Wind’s massive footprints is “complete & utter civil discord!” If it wasn’t so sad, it would be funny.
See: http://www.theithacajournal.com/article/20120713/NEWS01/207130353/Report-says-IDA-investment-fails-create-jobs?odyssey=tab|topnews|text|FRONTPAGE
[…] http://www.masterresource.org/2012/07/wind-energy-jobs-myth/ […]
Lisa,
It is worse. There is a NET job loss.
Net Jobs From Renewables is a Hoax: RE promoters and politicians often tout job creation by RE projects, but do not mention the jobs lost in others sectors of the economy.
Economists have used standard input-output analysis programs for at least 40 years to the determine the plusses and minuses of various economic activities. Numerous studies, using such economic analysis programs, performed in Spain, Italy, Denmark, England, etc., show for every job created in the RE sector, about 2-5 times jobs are destroyed in the other sectors.
For every 3 green jobs created in the private sector, 1 job is created in government, but, as a general rule, for every job created in government about 2 jobs are destroyed in the private sector, largely due to added economic inefficiencies; no one would claim government is more efficient than the private sector.
The above in tabular format:
Job gain = Subsidized RE, 3 + Government, 1 = 4
Job loss = Private due to RE, 6-15 + Private due to government, 2 = 8 – 17
Net job loss due to subsidizing RE = 4 – 13
Such job creation is unsustainable. Whether these government jobs are good or bad, needed or not needed, is irrelevant.
http://vtdigger.org/2012/03/27/digger-tidbits-vermont-ranks-no-1-in-green-job-survey-early-out-for-obama-event-sanders-no-1-congressman-on-twitter/#comment-32109
Note: This is not the case with increased energy efficiency subsidies. They create jobs in the EE sector, but also create a net increase of jobs in the other sectors, because the reduction of energy costs enables more spending on other goods and services.
http://en.wikipedia.org/wiki/Input-output_model#cite_note-ref-0
http://en.wikipedia.org/wiki/Input-output_model
http://www.texaspolicy.com/pdf/2012-02-PP03-LearningFromOthersMistakes-ACEE-JosiahNeeley.pdf
http://conservativedailynews.com/2011/09/green-jobs-why-wont-obama-learn-from-europe/
http://sistertoldjah.com/archives/2011/02/28/study-green-initiatives-actually-costing-more-jobs-than-they-create/?wpmp_switcher=mobile
http://greatlakeswindtruth.org/breaking-news/117-for-every-green-job.html
http://www.alabamapolicy.org/viewpoints/print.php?id_art=481
http://conservative-outlooks.com/2011/03/12/green-jobs-fruit-of-the-poison-tree/
http://budget.house.gov/News/DocumentSingle.aspx?DocumentID=261226
http://www.aei.org/article/energy-and-the-environment/the-myth-of-green-energy-jobs-the-european-experience/
Example of job shifting due to RE subsidies in Vermont:
In late 2009, the Vermont legislature created the SPEED program to offer premium prices to project developers of RE; without premium prices their projects would not be viable.
Under the Vermont SPEED program it would take about $228.4 million of scarce funds to build 50 MW of expensive renewables capacity that would produce just a little of variable, intermittent and expensive energy that would make Vermont’s economy less efficient at exactly the time it needs to become more efficient.
According to the VT-DPS, the SPEED program has fallen far short of its goal of building 50 MW of RE projects for about $228.4 million. After 3 years, just 7.1 MW of RE projects costing about $32 million has been built, and is producing just a tiny quantity of energy, and has created only about 3-5 net jobs.
The VT-DPS evaluated the program in 2009 and issued a white paper which stated about 35% of the $228.4 million would be supplied by Vermont sources, the rest, mostly equipment by non-Vermont sources, such as wind turbines from Denmark and Spain, PV panels from China, inverters from Germany; i.e., creating jobs abroad with Vermonter’s money!
There would be spike of job creation during the 1-3 year construction stage (good for vendors) which would flatten to a permanent net gain of 13 full-time jobs (jobs are lost in other sectors) during the O&M stage.
Note: Legislators and the VT-DPS were irrationally-exuberant thinking the entire 50 MW would be built in 1-3 years; bureaucrats should not be doing the planning that would be more expertly done by the private sector.
It gets worse. Under the SPEED program, these projects sell their energy to the grid at 3-5 times NE annual average grid prices for 20 years; the high-priced energy is “rolled” into a utility’s energy mix, resulting in higher electric rates for households and businesses, higher prices of goods and services, fewer jobs, lower living standards, less tax collections.
Most of the larger SPEED projects, up to 2.2 MW, are owned by the top 1% of households that work with lobbyists, politicians and financial advisers to obtain generous subsidies for their tax-sheltered LLC projects that produce expensive energy at high cost/kWh and avoid CO2 at high cost/lb of CO2; inefficient crony-capitalism under the guise of saving the world from global warming and climate change. No wonder Vermont’s households and businesses are rebelling.
http://publicservice.vermont.gov/planning/DPS%20White%20Paper%20Feed%20in%20Tariff.pdf
Net Jobs From Renewables is a Hoax: RE promoters and politicians often tout job creation by RE projects, but do not mention the jobs lost in others sectors of the economy.
Economists have used standard input-output analysis programs for at least 40 years to the determine the plusses and minuses of various economic activities. Numerous studies, using such economic analysis programs, performed in Spain, Italy, Denmark, England, etc., show for every job created in the RE sector, about 2-5 times jobs are destroyed in the other sectors.
For every 3 green jobs created in the private sector, 1 job is created in government, but, as a general rule, for every job created in government about 2 jobs are destroyed in the private sector, largely due to added economic inefficiencies; no one would claim government is more efficient than the private sector.
The above in tabular format:
Job gain = Subsidized RE, 3 + Government, 1 = 4
Job loss = Private due to RE, 6-15 + Private due to government, 2 = 8 – 17
Net job loss due to subsidizing RE = 4 – 13
Such job creation is unsustainable. Whether these government jobs are good or bad, needed or not needed, is irrelevant.
http://vtdigger.org/2012/03/27/digger-tidbits-vermont-ranks-no-1-in-green-job-survey-early-out-for-obama-event-sanders-no-1-congressman-on-twitter/#comment-32109
Note: This is not the case with increased energy efficiency subsidies. They create jobs in the EE sector, but also create a net increase of jobs in the other sectors, because the reduction of energy costs enables more spending on other goods and services.
http://en.wikipedia.org/wiki/Input-output_model#cite_note-ref-0
http://en.wikipedia.org/wiki/Input-output_model
http://www.texaspolicy.com/pdf/2012-02-PP03-LearningFromOthersMistakes-ACEE-JosiahNeeley.pdf
http://conservativedailynews.com/2011/09/green-jobs-why-wont-obama-learn-from-europe/
http://sistertoldjah.com/archives/2011/02/28/study-green-initiatives-actually-costing-more-jobs-than-they-create/?wpmp_switcher=mobile
http://greatlakeswindtruth.org/breaking-news/117-for-every-green-job.html
http://www.alabamapolicy.org/viewpoints/print.php?id_art=481
http://conservative-outlooks.com/2011/03/12/green-jobs-fruit-of-the-poison-tree/
http://budget.house.gov/News/DocumentSingle.aspx?DocumentID=261226
http://www.aei.org/article/energy-and-the-environment/the-myth-of-green-energy-jobs-the-european-experience/
Example of job shifting due to RE subsidies in Vermont:
In late 2009, the Vermont legislature created the SPEED program to offer premium prices to project developers of RE; without premium prices their projects would not be viable.
Under the Vermont SPEED program it would take about $228.4 million of scarce funds to build 50 MW of expensive renewables capacity that would produce just a little of variable, intermittent and expensive energy that would make Vermont’s economy less efficient at exactly the time it needs to become more efficient.
According to the VT-DPS, the SPEED program has fallen far short of its goal of building 50 MW of RE projects for about $228.4 million. After 3 years, just 7.1 MW of RE projects costing about $32 million has been built, and is producing just a tiny quantity of energy, and has created only about 3-5 net jobs.
The VT-DPS evaluated the program in 2009 and issued a white paper which stated about 35% of the $228.4 million would be supplied by Vermont sources, the rest, mostly equipment by non-Vermont sources, such as wind turbines from Denmark and Spain, PV panels from China, inverters from Germany; i.e., creating jobs abroad with Vermonter’s money!
There would be spike of job creation during the 1-3 year construction stage (good for vendors) which would flatten to a permanent net gain of 13 full-time jobs (jobs are lost in other sectors) during the O&M stage.
Note: Legislators and the VT-DPS were irrationally-exuberant thinking the entire 50 MW would be built in 1-3 years; bureaucrats should not be doing the planning that would be more expertly done by the private sector.
It gets worse. Under the SPEED program, these projects sell their energy to the grid at 3-5 times NE annual average grid prices for 20 years; the high-priced energy is “rolled” into a utility’s energy mix, resulting in higher electric rates for households and businesses, higher prices of goods and services, fewer jobs, lower living standards, less tax collections.
Most of the larger SPEED projects, up to 2.2 MW, are owned by the top 1% of households that work with lobbyists, politicians and financial advisers to obtain generous subsidies for their tax-sheltered LLC projects that produce expensive energy at high cost/kWh and avoid CO2 at high cost/lb of CO2; inefficient crony-capitalism under the guise of saving the world from global warming and climate change. No wonder Vermont’s households and businesses are rebelling.
http://publicservice.vermont.gov/planning/DPS%20White%20Paper%20Feed%20in%20Tariff.pdf
These same types of jobs “models” were run by the Minnesota Department of Employment and Economic Development (DEED) on behalf of T. Boone Pickens’s proposed AWA Goodhue wind project. The industrial wind developer claimed the 50 turbine project would mean 150 construction jobs for 6-9 months followed by 2-5 permanent O&M jobs. When DEED got done running this sWINDle through their magical jobs model they predicted 916 construction jobs and 42 operational jobs… Since Minnesota is number 4 or 5 in installed wind and we’ve had substantial industrial wind since Enron’s work here in the early 1990s, one would think that actual data would be used. But clearly “model shopping” is used in all aspects of wind development: jobs, production, O&M costs, noise, eagle kills, bat deaths…. The AWEA approach is to shop around until you find the model that spits out the numbers you want to see. Reality seems unimportant to AWEA – so long as they get paid.
[…] recent article, “Wind Energy Jobs Myth,” reported: “Seventy-five percent of the Section 1603 largesse was lavished on Big Wind, and […]
[…] recent article, “Wind Energy Jobs Myth,” reported: “Seventy-five percent of the Section 1603 largesse was lavished on Big Wind, and […]
[…] recent article, “Wind Energy Jobs Myth,” reported: “Seventy-five percent of the Section 1603 largesse was lavished on Big Wind, and […]
[…] Navigant jobs study commissioned by the American Wind Energy Association, which uses JEDI models, suffers the same failures. It wasn't until Congressional members hammered NREL earlier this year over unsubstantiated and […]
[…] recent article, “Wind Energy Jobs Myth,” reported: “Seventy-five percent of the Section 1603 largesse was lavished on Big Wind, and […]
[…] should note that the writers at MasterResource dispute these job numbers and challenge the all-of-the-above (centrally-planned/government-selected) energy […]
[…] Thompson’s assertion that nearly 40,000 American jobs will be lost is another AWEA talking point that cannot be substantiated as I discuss here. […]