The economics of green energy

Today's New York Times features an article which basically admits alternative energy doesn't make any sense absent government intervention. To wit:

“The renewable energy industry in the U.S. is an underdeveloped developing industry,” said Michael Peck, director of external affairs for Gamesa USA, a Spanish-owned company that has two wind turbine factories in Pennsylvania. “Manufacturers, developers, utilities, financiers — they don’t see the legislative pieces that they’re all hoping for to help the industry move forward.”

...Within industry and the environmental movement, there are recurring calls for Congress to require the nation to generate 15 percent or 20 percent of its energy through renewable sources by a specific year, say 2020. General Electric, which has 10,000 wind turbines in the United States, says that to encourage growth in the wind industry, the nation should adopt a target of obtaining 12 percent of its energy from renewable sources by 2012.

“The clean energy market is gigantic and growing,” said Phyllis Cuttino, a director of the Pew Charitable Trusts’ Environmental Group. “The U.S. has a rich manufacturing base, a well educated work force and we are an innovation center. But if we don’t have the policies in place to make investment here a sure thing, then we could potentially lose to other countries. Other countries are jumping in. They have policies to take a lot of projects to scale, and that’s what’s missing in the United States.”

Nathaniel Bullard, a solar analyst at the research firm New Energy Finance, added, “In the U.S. there are problems arranging the project financing that is driving growth in countries like Spain.” Spain ranks second behind Germany and ahead of the United States in adding annual solar capacity.

...Rhone Resch, president of the Solar Energy Industries Association, said there would be more such investment in the United States if it had incentives like those in China, Malaysia or South Korea.

“In China, 80 percent of the entire cost of a factory and worker training is paid for by the government,” Mr. Resch said. “Malaysia will give you a 10- or 20-year tax holiday.”

He praised Mr. Obama’s $2.3 billion tax credit program, but said its 30 percent credits were not nearly as generous as China’s.

A few points:

• What each one of these passages reveals is that so-called green energy, which Tom Friedman and others continuously assure us represents the next great industrial sector, cannot survive without government largesse. But if such technologies represent the future, shouldn't greedy capitalists looking to make a buck be rushing to invest their money? The fact they are not speaks volumes.

• This is further evidence of the nexus between big government and big business. Corporations and financiers are eager to increase government involvement to ensure their investments are profitable, even if that means taking tax dollars away from other Americans. Business gets its payoff and government gets its green jobs -- one hand washes the other.

• The article mentions the burgeoning solar capacity of Germany and Spain, but neglects to mention what a waste such investment has been in both countries. Fortunately we can simply return to the blog archives.

Update: More on green energy follies here.