The anatomy of a WSJ article on "Europe's Green Energy Suicide"
- 12 Jun 2012, 16:30
- Chris Peters
Fellow Europeans, apparently we're all committing 'green energy
suicide' - that's according to a piece last week in the Wall Street
a piece by Rael Jean Isaac, who has recently authored a book
about climate activism for the US Heartland Institute.
The general tone of the piece is, as you might guess, not
particularly favourable towards renewable power, and the article
contains a bewildering array of statistics and figures. And a
closer look at the sources reveals a mixed bag - some are accurate
and up to date; others are both old and dubious. It all adds up to
a somewhat chaotic economic argument.
Here's our take on some of the claims made in the piece. First,
what looks unproblematic: A description of EU energy targets seems
correct, as does a brief appraisal of Danish energy policy. Short
sections dealing with Spain and Italy we haven't checked in detail
as we don't know much about them.
We have limited ourselves to examining the part of the article
that deals with UK energy policy, which includes an accurate
(although partial) reporting of the effect that UK government
energy policies will have on UK energy bills. But there are also
Job loss claims: only one report cited
The piece begins by arguing that energy intensive industries will
lose out because of "green energy suicide", referencing a report
from consultancy Verso Economics, which:
"...has calculated the opportunity cost
of the United Kingdom's subsidy system for renewables to be 10,000
jobs between 2009 and 2010 alone".
This figure is from the report
Worth the candle? The economic impact of renewable energy policy in
Scotland and the UK (March 2011), which says:
"...policy to promote renewable energy
in the UK has an opportunity cost of 10,000 direct jobs in 2009/10
and 1,200 jobs in Scotland".
The report argues that there would be 10,000 fewer jobs under UK
green energy plans than otherwise. However, the report focused only
on Scotland, with Full Fact
suggesting that the jobs conclusion had been "extrapolation...
in which it is difficult to have full confidence".
It's worth noting that the consultancy which
produced the report isn't particularly well known, and so this
claim sits alongside other
on what effect green targets will have on employment. It doesn't
seem to us that there is a particularly clear answer yet.
141 per cent costs to energy intensive industry: range of
Turning to the cost of green policies to energy intensive
industry, the piece says:
"A report by the Energy Intensive Users
Group (EIUG) (which represents energy-intensive British businesses)
and the Trades Union Congress (TUC) cited steel making, ceramics,
paper, cement and lime manufacture, aluminum and basic inorganic
chemicals as industries facing up to 141% in additional energy
costs by 2020 as a result of CO2 emissions-reduction schemes".
The actual figure comes with quite a range of uncertainty - the
report in question says:
"By 2020 the UK's climate change
policies will increase energy costs to intensive users by between
18% and 141%."
Although the WSJ article does say "up to" 141 per cent, leaving
out that huge range could be seen as pretty disingenuous.
But does the blame lie with the WSJ on this one? Perhaps there's a
more unlikely culprit, because this section of the article bears a
striking similarity to a 2010 BusinessGreen article
"Carbon policies will drive heavy industry out of the UK, report
"The report cites steel making,
ceramics, paper, cement and lime manufacture, aluminum and basic
inorganic chemicals as the industries based in the UK which face
increases in their energy costs of up to 141 per cent by 2020".
...almost word-for-word what the WSJ piece says. Of course, both
could be working off a press release which we haven't been able to
find, but this seems unlikely, because of this quote in the
"The current policies do seem to be
angled towards creating a market for overseas competitors" EIUG
director Jeremy Nicholson told Businessgreen.com
...which is repeated verbatim in the WSJ:
"EIUG Director Jeremy Nicholson notes
that "the current policies do seem to be angled towards creating a
market for overseas competitors".
Clearly the statistic wasn't checked before it was used, as
doing so would have revealed the range of the estimate.
Costs of wind power to the UK: apparently taken from a
Christopher Booker article
Next, the WSJ takes aim at a mysterious wind farm project which
will 'ring' the UK coastline:
"The government estimates that a planned
offshore wind farm project ringing the coast will cost GBP 140
billion, or GBP 5,600 ($8,972) for every household in the
This section appears to have been taken from a piece by
Telegraph climate skeptic columnist
Christopher Booker, in which he says:
"Government's offshore wind farm plans
would, by 2020, cost £100 billion [...] plus £40 billion more to
connect these windmills to the grid, a figure given us by the
National Grid last year."
According to Booker the ultimate source of this figure is an
announcement by the government made "three years ago". The only
likely source we can find for this is the
estimation by the Crown Estate that the "The capital
investment required for Round 3" of the offshore wind expansion
programme "is in the order of £100bn". Round 3 was
first announced by the Crown Estate in 2008.
This 2011 report to the Offshore Wind Developers Forum also
"Agreements to deliver consents for 32
GW of operating wind farms that could then be operating by 2020.
This will require funding of the order of £100 billion, excluding
the cost of grid".
But there's an important caveat here. As far as we can tell, the
UK government isn't planning for there to be 32GW of offshore
wind by 2020. The government's 'central range' aim is 18GW, with
Committee on Climate Change recommending a 13 GW target by
2020, "unless there is clear evidence of cost reduction".
Comparing the cost of gas and offshore wind : Energy from
offshore wind is not 20 times more expensive than energy from
The WSJ argue that "[c]onventional energy could provide the same
amount of energy at 5% of the cost". This also appears to come from
Booker, who writes that "Britain's newest gas-fired power station"
in Plymouth could generate " 882MW at a capital cost of £400
million - just £500,000 for each megawatt" He compares this to the
costs of offshore wind he's already quoted, saying this shows that
offshore wind is "22 times more expensive".
What Booker's calculation tells you is that it's cheaper to build
a megawatt of gas capacity than a megawatt of offshore wind
capacity. But this isn't the correct way to compare the cost of
energy itself, because gas plants have ongoing fuel costs, whereas
wind farms don't.
To compare the cost of actually generating electricity, 'levelised
costs' include capital costs (the cost to build the power plants),
fuel costs, operating costs and the cost of carbon. To get an idea
of the levelised costs of wind and gas, a report published in 2011
Mott McDonald for the Climate Change Committee estimates that
the current levelised cost of offshore wind is £169/MWh, and puts
the cost of gas power (with carbon capture and storage) at
DECC has recently estimated the levelised cost of gas without
CCS at £76.6/MWh.
So, by this measure, it's currently twice as expensive to generate
electricity from offshore wind as it is from gas - not twenty times
Despite some figures and facts which are accurate, it does seem
that this is an article written from a very definite perspective,
which picks and chooses from the research available to make its
case. It also appears to borrow facts, statistics and arguments
from less-than-authoritative sources.
It's worth pointing out that the piece ends with the claim that
"Evidence mounts daily that man-made global warming is a phony
apocalypse..." Perhaps this is what you'd expect from an author who
is being promoted by the
Heartland Institute - and it might also suggest the extent to
which the author is prepared to consider evidence which runs
counter to her hypothesis.