Subsidizing zeppelins

It appears that the race to be the first to build a profitable renewable energy sector is turning into the next version of the war over the textiles industry. Politicians and pundits in the US howling about how cheap, state-subsidized Chinese  wind and solar producers are planning to destroy foreign jobs. Europeans are joining the chorus. Are they right? Today, Chinese wind turbine manufacturer A Power and its partner, US Renewable Energy Group, tossed a sop in their critics’ direction, announcing plans to build a wind turbine plant in the US which would create 1,000 manufacturing jobs and provide work to US construction contractors. This will perhaps appease those who believed that US stimulus funds should go towards job creation in the US, not China, but others believe it is a symbolic gesture – for example, Suntech’s manufacturing plant in the US will employ 250 people, compared with some 9,000 jobs that will stay in China. China’s wind and solar power manufacturers are massive and ready to roll over firms in the developing world, at least as far as price point is concerned.

However, it is not a question of how many jobs get placed where, but what kind of jobs they are. China, as usual, is very good at producing cheaper components – and given that one of the biggest barriers to renewable energy use is its price, anything that reduces costs for the consumers will be good for the environment and reduce dependency on the politically unstable oil producing regions (we note, with some amusement, that Saudi Arabia has been arguing that it should be compensated for the economic damage alternative energy usage will have on its economy). The question should not be whether stimulus funds should go here or there, but whether manufacturing plants in the developed world will ever be competitive without subsidy? In addition, solar power manufacturing produces a nasty swath of toxic byproducts, in particular from the mining necessary to obtain the necessary minerals like cadmium and selenium. From a purely selfish parochial perspective, developed countries should be glad China is taking the lead in low-end manufacturing; it means the bulk of the pollution stays in China, while the benefits of clean energy would be enjoyed by consumers abroad.

And then there is the role of innovation. China does not make a better wind turbine, it just makes a cheaper one. Nor is solar power a new technology. The areas most in need of innovation are transmission and policy. In terms of transmission, there has been a lot of talk about "smart grids" that can handle variable energy supplies. This is, so far, a desire, not a reality. Power grids today require two kinds of plants, plants that provide the base load and "load chasing" plants that handle sudden spikes in demand. The former include coal, nuclear and hydro plants which produce a steady stream of energy. "Load chasing" is largely handled by natural gas plants, which are essentially giant jet engines that can be accelerated and turned down quickly. Wind and solar can do neither. For variable energy sources, their energy must be converted in order to be useful, which means it must be stored in a form that can be released on demand. Without the ability to store this energy, you would still need to have a full complement of conventional power plants to offset the unavailability of solar power at night, and the unavailability of wind power at any given time.

It’s not that there isn’t any way to store this energy. There is battery technology, which has been stagnant for decades, as your laptop illustrates. And then there is using variable power sources to generate hydrogen, the cleanest fuel in the world. This technology exists, but the problem is, stored hydrogen is a bomb. Hydrogen fuel cells in cars, for example, would likely ignite during an accident, and would burn at a heat that would melt the car with you inside. As for the larger storage containers necessary to capture wind and solar power, where do you put them? Not every country has massive unpopulated areas where they can stack millions of hydrogen tanks. It is, therefore, entirely possible that solar and wind power’s actual ability to displace conventional forms of energy is overhyped, and that governments have bought into this hype, and are subsidizing it, and producing a lot of companies creating a lot of hardware (and jobs) that won’t actually deliver any benefit. There is precedent for this; as late as the Clinton administration, the US government still operated a plant producing gas for zeppelins.

Innovation, especially when steered by governments, is not a panacea, or so argues the Green Leap Forward. After all, energy conservation doesn’t require much in the way of invention, just changing the way you do things. And this is where policy comes in. Americans didn’t buy massive gas-guzzling SUVs because they are all jerks, but rather because the US government gave the cars such prejudicial tax and regulatory treatment that they were far cheaper than they should have been. Chinese manufacturers are massively wasteful because of weak regulation and subsidized energy bills. China’s largest energy hogs are its buildings, many of which were built by the state – I recollect the winter in frosty Harbin, where everyone who lived above the ground floor had to leave their windows wide open to keep from being baked alive by the central heating systems. Today’s global policy environment could be best described as corporate handouts to green companies, and this is hardly innovative.