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 Journal by 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 some problems.

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 alternative viewpoints 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 estimates obscured

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 warns".

BusinessGreen wrote:

"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 BusinessGreen piece:

"The current policies do seem to be angled towards creating a market for overseas competitors" EIUG director Jeremy Nicholson told

...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 country."

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 agrees:

"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 the 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 gas

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 by consultancy 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 £100-105/MWh. 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 more expensive.

In summary

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.

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