California’s Solar Virtue Signal Could Put Housing Out of Reach

The California Energy Commission (CEC) said, “Eureka, we have a refulgently brilliant idea! Let’s require installation of solar panels on new home and low-rise apartment building construction.” Assuming the California Building Standards Commission ratifies the CEC’s proposal (a purported slam-dunk) it will take affect starting January 1, 2020. Less than two years from now.

”The case for this was extremely strong,” [1] CEC commissioner Andrew McAllister said. “[In] California, we do believe in climate change, we do believe in facts … It’s become clear to all of us it’s the right thing to do and that the marketplace is ready.”[2] the UPI reported.

In light of their actions, what the CEC doesn’t believe in are: 1) carbon-free nuclear power plants, 2) consumer choice, or 3) free markets. California has bent to activist pressure and already closed the San Onofre nuclear power plant. Diablo Canyon’s nuclear power plants will close in 2024 and 2025. When the Commish said, ”[T]the marketplace is ready” he didn’t mean a marketplace where you get to choose what you want. He meant a marketplace where you get to pay for what he wants. He meant delicious gooey Crony Capitalism[3], where well-healed, well-connected lobbyists convince bureaucrats to employ the lobby’s preferred remedy.

According to NPR, “Representatives from construction groups, public utilities and solar manufacturers all spoke in support of the plan, which they’ve helped the commission develop for years,” the AP reports. “No industry groups spoke in opposition.” Of course, no groups spoke in opposition: the benefits are concentrated in a few industries and the harm is dispersed among many lower income people and potential homeowners.

The result is Crony Capitalist Pork. Keeping with the meat metaphor, I have no beef with these groups representing their constituents, but I don’t have to like the result. I like markets to sort out such things. Government’s role is to enforce contracts between individuals and protect citizens from crimes against themselves or their property. Beyond that, government’s top-down approach hampers market-driven, bottom-up solutions.

And the bottom line to everyone–but especially the people on the bottom economic rung–is it effectively takes money from their pockets to pay for this scheme. Under this program, everything is going to cost more, especially housing. And not just newly constructed housing. All housing will cost more, including rentals. Look for an upturn in people looking for existing homes because they’ve been priced out of building new. This will force prices up. It is obvious that the CEC does not understand supply and demand curves, incentives, or anything from a basic economics course.

Unlike Classical Liberals, Progressives within government are sure they know not only how to diagnose a market problem, but how to “fix” it with a sure fire prescription. It’s like your nosy neighbor telling you what’s wrong with your life and has the answer to help you. Now imagine she has the power to force you to do it. That is what the CEC has done. As Veronique de Rugy writes on Reason.com, “These members of the ‘government within the government,’ produce one freedom-restricting, economy-hindering rule after another without much oversight. These rules take many forms, and few even realize they’re in the making—until, that is, they hit you square in the face.”

Photo Credit: Libertarianism.org

The progressive Los Angeles Times editorial board is all for punching you square in the face. “Of course California should require solar panels on new homes,” An LA Times opinion piece gushed.

The opening paragraph says, getting punched in the face is good for you.

The benefits of solar power are well established. Photovoltaics harness the sun to create electricity, reducing the need for dirtier forms of energy. And residents generate their own power, cutting their utility bills.[4]

There is so much wrong with this paragraph. It begs the question with “The benefits of solar power are well established.” No, the benefits of solar power are not well established. As Michael Shellenberger, President of Environmental Progress notes, If Solar And Wind Are So Cheap, Why Are They Making Electricity So Expensive? “Electricity prices increased 24 percent in California during its solar energy build-out from 2011 to 2017.” And from 2011 to 2017, California, a state whose progressive leadership is committed to renewable energy, saw electricity rates rise to five times higher than the national average. And California is not a one-off in the rate hike department. Germany, Denmark, and Spain already blazed that trail.

The Times editorial goes on to say, The energy commission’s new building standards, which require both solar panels and upgraded insulation, air filters and other efficiency measures, are expected to raise the cost of a new home by $9,500. That’s about half the cost of installing solar systems on existing homes (although tax breaks and other financial incentives can lower the bill). And homes built to the new standards are expected to use 50% as much energy as homes built in 2016 without solar panels….

Yes, the new standards will increase the cost to build homes and apartment complexes. That’s a concern in California, which is in the midst of a housing crisis because it failed for years to build enough homes to keep up with population demand. However, energy-efficiency investments save money over time. The energy commission estimated the new standards will add $40 per month to the average new home mortgage payment, but save $80 per month on heating, cooling and lighting.

The installation cost appears correct though it may turn out to be higher. It is the anticipated savings in energy that they expect that should trouble you. Federal and state governments continue to press for efficiency as a way to save fuel (in order to lower greenhouse gas emissions). And they are usually dead wrong. Too often, government officials do not consider The Energy Efficiency Paradox. Basically, if you save money on one thing, you have money for more of that thing or of something else. If your house is better insulated you might opt to make it cooler or warmer to be more comfortable. You might take a drive to the beach with your savings or buy a bigger car.

And the mandate will be a tax on other rate payers. According to Severin Borenstein,  E.T. Grether Professor of Business Administration and Public Policy at the Haas School of Business writing to Commissioner Weisenmiller, “The savings calculated for the households are based on residential electricity rates that are far above the actual cost of providing incremental energy, so embody a large cross subsidy from other ratepayers. This would be a very expensive way to expand renewables and would not be a cost effective practice…”  In a nutshell, the LA Times editorial board and the CEC cooked the numbers.

The state is spurring innovation and job creation in the clean-energy sector. (California is ranked first in the nation for solar industry jobs at 86,000 — seven times more than the second-ranked state.)

Whenever you hear about government “spurring innovation and job creation” it is to cover the noise of cash being sucked from your bank account. Pork rarely innovates anything. And, the number of jobs is not a good thing. It is the opposite of a good thing for the majority of us—the people paying for electricity and for stuff made with that electricity. The electricity made with solar costs more because it takes forty people in solar to produce the same amount of electricity produced using natural gas. Lots of Jobs per KWH is Bad, not Good. [5]

The Times board sums up their argument with, At the moment, there’s simply no better way to reduce the power demand and greenhouse gas emissions from new residential developments than combining solar power with more energy-efficient designs. The long-term savings, both to homeowners and to the environment, are well worth the up-front cost.

I can think of several reasons for the editorial board lobbing this insane whopper. The possibility that I favor is they have their heads so far up their asses they can’t see more obvious possibilities, such as nuclear.[6] Robert Bryce said in a talk he gave, “There has been a continuing pursuit of density, and, more particularly, power density. And yet now when it comes to energy production, we are told we should go the other way. Toward low power density…. This makes no sense. I’d call it insane but it would be an insult to crazy people.”

In an insult to crazy people, California is requiring a hella-expensive feel good virtue signal and shutting down its power-dense, carbon-free nuclear power plants and replacing them with natural gas and coal (forget the solar panels—they all make power at the same time—driving down the value of the electricity they produce.)

Insane. 

 


Footnotes

  1. No. He lies like a cheap rug. Cardboard suitcases are stronger than this case’s raison d’être. The case isn’t very strong at all. 
  2. Translation: “The fix is in.”
  3. Also known as cronyism, venture socialism, corporatism, mercantilism, or just plain horse droppings. “Unlike in a free market capitalist system, under crony capitalism it is often more profitable for businesses to spend resources lobbying legislators for handouts in the form of grants, loans, or tax advantages, and protections against competition in order to increase their profits.  In turn, the government’s willingness to hand out special privileges promotes the politically well-connected rather than those who seek to earn the preference of investors and consumers based on merit. The gains of such activities usually accrue to the businesses and politicians involved at the expense of consumers and taxpayers.” http://library.intellectualtakeout.org/library/business-and-economics/free-market-capitalism-vs-crony-capitalism
  4. See Footnote 1
  5. Imagine going to Burger King for dinner and, by law, each BK must employ 40 times the people it would normally at $15 per hour to make your meal. The result is one hellaciously expensive burger.
  6. “Of all ignorance, the ignorance of the educated is the most dangerous. Not only are educated people likely to have more influence, they are the last people to suspect that they don’t know what they are talking about when they go outside their narrow fields.”- Thomas Sowell

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The Cost of Coal

A recent tweet trumpeted a report that 250,000 Chinese died in 2013 due to smog from coal (http://www.theguardian.com/environment/2013/dec/12/china-coal-emissions-smog-deaths). The report on the deaths came partly from Greenpeace, of course.

The 5,354 MW Belchatów Power Station in Poland – one of the world’s largest coal fired power stations. Photo credit: Wikipedia

There is little question that coal is dangerous. It is dangerous to mine. Its emissions are a problem; coal ash is more radioactive than nuclear waste. Yet coal is cheap, abundant, and the demand for it is vast. As Justin Lin wrote in 2009 on the World Bank’s blog:

There are roughly 1.6 billion people in developing countries–700 million of whom are in Africa and 550 million in South Asia–who lack access to electricity. Because coal is often cheap and abundant, and the need for electricity is so great, coal plants are going to be built with or without our [World Bank] support.

The question that should spring  to everyone’s mind is “how many died in China from cold or indoor pollution before the electrification that the coal plant brought with it?” The Manichaeistic, black/white premise of something being all good (e.g., Renewable Energy) or all bad (e.g., Fossil Fuel) is at best, uncritical thinking, and at worst, lying.

Greenpeace, the report’s author, is of course fretting about climate change, and its answer is to turn back the clock. I am a luke-warmer in regards to climate change; I think the climate is much less sensitive to greenhouse gases than the Global Climate Models (GCM) that the International Panel on Climate Change (IPCC) suggest. But even a full-throated supporter of climate change, such as Mark Lynas, sees the need for coal in places such as China and India:

The costs of poverty – which includes millions of preventable deaths of young children, lack of access to water and sanitation, reduced livelihood prospects, large-scale hunger and malnutrition, and so on… are clearly much greater than the direct costs of coal burning, and this equation probably still holds even when the future damages from climate change are factored in. – Mark Lynas, 2014, India’s coal conundrum

To be clear, the possible deaths of people due to the burning of coal are regrettable. Scrubbers would ameliorate the particulates that cause the health problems; as China and India get richer their people will become more vocal in their calls for cleaner air. At the moment, jobs, cleaner drinking water, sanitation, and food on the table appear to be of greater importance.

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Green Games

Cover of "The Skeptical Environmentalist:...

Cover of “The Skeptical Environmentalist: Measuring the Real State of the World” Cover via Amazon

 

Here is today’s Green Chain column for the Lake County Record-Bee.

“When the facts change, I change my mind. What do you do, sir?” – John Maynard Keynes.

It appears we are witnessing the crumbling of the green movement, as we know it. Dr. James Lovelock, who postulated the ‘Gaia hypothesis’ of earth operating as a self-regulating organism, is the latest to stray, if not exactly leave the faith. The list non-orthodox greens grows continually and now includes Mark Lynas, the author of The God Species and Stewart Brand, the author of the iconic Whole Earth Catalog.

Perhaps the first to change his mind and leave the Greens was Dr. Patrick Moore, a co-founder of Greenpeace. He felt those in the environmental movement had made their point,

“[W]hen a majority of people decide they agree with you it is probably time to stop hitting them over the head with a stick and sit down and talk to them about finding solutions to our environmental problems,” Patrick Moore says.

Greens have always been fractious, and similar to the Tea Party on the right, they hate compromise. Former Greenpeace director Paul Watson berated Patrick Moore in an email: “you’re a corporate whore, Pat, an eco-Judas, a lowlife bottom-sucking parasite…” And, Bjørn Lomborg, author of The Skeptical Environmentalist took a pie in the face from then true believer, Mark Lynas.

At the heart of the disagreement sits the use of technology. “There is a battle underway for the soul of environmentalism,” writes freelance journalist Keith Kloor, “It is a battle between traditionalists and modernists. Who prevails is likely to be determined by whose vision for the future is chosen by a new generation of environmentalists.”

Traditionalist Greens say, “Stop!” Technology is the Problem. The Worldwatch Institute says we should not simply stop growing our economies, but we must actually contract: “The rapidly warming Earth and the collapse of ecosystem services show that economic ‘degrowth’ in overdeveloped countries is essential and urgent…. Degrowth can be achieved through policies to discourage overconsumption, raising taxes, shortening work hours, and ‘informalizing’ certain sectors of the economy.” The goal, Rik Scarce writes in his book “Eco-Warriors,” is to arrive at “a steady-state relationship with all of nature’s creations, wherein human attitudes and actions dominate no one and no one thing. Their alternative seeks to guarantee life, liberty, evolution, and happiness for humans and non-humans alike.”

Modernist Greens say that technology has a role in making the world greener and more livable for all creatures, including humans. Stewart Brand says “If Greens don’t embrace science and technology” they risk becoming irrelevant.

The modernists are in favor of cities, people, and technology (including genetically engineered food).

Cities, people, and technology are…good? What is happening? Has the world gone crazy?

Perhaps the world is crazy. (Not exactly a news flash now, is it?)

As you know, I have argued on these pages that people, cities, technology, and economic growth have not only improved our lives here in the United States, but have improved the environment. Economic growth using non-renewables has overall been beneficial. The author of “The Rational Optimist,” Matt Ridley notes that technology takes less land and uses materials other species do not want:

“[E]conomic development leads to a switch to using resources that no other species needs or wants…. Contrast Haiti, which relies on biomass (wood) for cooking and industry, with its much (literally) greener neighbour the Dominican Republic, which subsidises propane for cooking to save forest…. [E]conomic growth leads to a more sparing use of the most important of all resources – land.”

Is economic growth and technology a wonder cure? A panacea that works with no side effects? No. But, then everything has its upsides and downsides.

If we humans continue to move from rural to urban (cities are denser), drill and mine for our energy rather than grow it, continue to wring more food and fiber from each acre, and develop incentives for conserving water and our fisheries, we will yet leave a better place for our (and Nature’s) children and grandchildren.

Matt Ridley sums it up well:

“Seven billion people going back to nature would be a disaster for nature.”

Notes/Sources:

  • Johnston, Ian. ‘Gaia’ scientist James Lovelock: I was ‘alarmist’ about climate change. msnbc.com. http://worldnews.msnbc.msn.com/_news/2012/04/23/11144098-gaia-scientist-james-lovelock-i-was-alarmist-about-climate-change
  • “If Greens don’t embrace science and technology and jump ahead to a leading role in both, they may follow the Reds into oblivion.” Brand, Stewart. Whole Earth Discipline: Why Dense Cities, Nuclear Power, Transgenic Crops, Restored Wildlands, and Geoengineering Are Necessary · “When the facts change, I change my mind. What do you do, sir?” http://en.wikiquote.org/wiki/John_Maynard_Keynes
  • Kloor, Keith. “The Limits to Environmentalism” Discover.com http://blogs.discovermagazine.com/crux/2012/04/27/the-limits-to-environmentalism/
  • Assadourian, Erik. “The Path to Degrowth in Overdeveloped Countries.” Worldwatch Institute, STATE OF THE WORLD 2012: Moving Toward Sustainable Prosperity
  • Moore, Patrick. “Confessions of a Greenpeace founder.” 2011. Vancouver Sun. http://www.vancouversun.com/opinion/Confessions+Greenpeace+founder/4073767/story.html#ixzz1BErUqcWL
  • Scarce, Rik. Eco-Warriors: understanding the radical environmental movement. 1990. Noble Press, Chicago, IL
  • “Seven billion people going back to nature would be a disaster for nature.” Comment by Matt Ridley. Hickman, Leo. Does consumption need tackling before population? http://www.guardian.co.uk/environment/blog/2012/apr/26/royal-society-report-consumption-population#block-17

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