Posted by
Crescen7(Regis Matejcik) on Thursday, May 07, 2009 9:23:13 AM
As the debacle of Cap and Trade legislation looms ever closer, the public is often treated to the corresponding promise of a "New Green Economy" or "New Green Jobs" as a result of our "Transformation from Carbon to Renewable Energy." President Obama recently made this argument in a speech from a solar panel manufacturing plant. The New Green Economy is characterized as creating a large number of high paying jobs that are similar in size and scale to current manufacturing jobs. This characterization that suddenly the U.S. will suddenly employ millions of people building wind mills and solar panels lacks any reasoned analysis.
Consider . . .
Current "Carbon based" fuels already employ a small but significant sector of the economy. To the extent that our energy sources are "transformed" we will obviously destroy many of the jobs that currently exist in that industry. Consequently, at the very start of the "transformation" the new "green economy" will first have to create enough jobs to make up for those that it destroyed.
One might argue that alternatives will never completely replace carbon fuels - so many of those jobs will still exist. This is probably true, there in lies the other side of this energy conundrum. Since carbon based fuels will continue to exist, new "green energy" must be at least somewhat competitive in price with carbon fuels. Yet, to the extent the carbon fuel economy shrinks, there will be at least some marginal decline in jobs in the carbon fuel sector.
It must be pointed out that our current energy industry produces energy rather efficiently, therefore by definition, doesn't employee a large percentage of the population. For example, Exxon, the worlds largest publicly traded oil company, employs about 107,000 people worldwide. By contrast, General Motors, the troubled flailing auto maker employs over 252,000.
When comparing the revenue per employee the contrast becomes more stark. The 2008 numbers are:
Exxon $4.45 million / employee
GM $.59 million / employee
The above numbers, courtesy of Wikipedia are for total revenue, they do not consider costs of any kind. Therefore, it is inconsequential for purposes of this discussion to point out that Exxon had huge profits while GM had massive losses. The undeniable point is that carbon based fuels provide a large amount of product value per employee, hence a relatively small number of employees. This efficiency of product value per employee has a great deal to do with the cost effectiveness of carbon based fuels. The argument for "green jobs" generally assumes production based jobs in the engineering, and manufacturing of "green" energy components.
It is antithetical to this efficiency found in carbon based energy to contend that "green energy" can be produced by a large number of people in high paying jobs and still compete with the highly cost effective carbon based fuels. This is not to say that "green energy" is not feasible. It may well be. (though it's doubtful that we've yet discovered how.) The conclusion here is simply this.
For "Green Energy" to be feasible, it must be cost competitive with conventional energy.
For "Green Energy" to be competitive it must achieve cost per employee units similar to conventional energy.
For "Green Energy" to provide more vastly more jobs than it displaces makes it impossible to achieve the unit cost efficiencies of conventional energy.
For Green Energy to be a feasible cost competitive substitute for conventional carbon based energy, it will have to be relatively "jobs neutral."
One can yearn for "green energy" or "green jobs" - but not both.