Saturday, September 17, 2011

Great Article From David Frum - National Post

-Doubling down on the green-jobs money pit

by David Frum, National Post

As we all know, Ontario is struggling to find new jobs for displaced industrial workers. I propose we put those people to work in the promising new market for tropical fruits and vegetables: pineapple, mangoes, hearts of palm, things like that. You may object: Ontario is not especially well-suited to growing such products. I answer: Yes, that’s true today. But not necessarily tomorrow.
I will sign a $7-billion dollar contract with the Dole pineapple company if they will open a pineapple field in Ontario. I will promise to buy their pineapples at a premium over the current market price for pineapples: 300%, 400%, whatever it takes. Who says no to money like that? And in exchange, they’ll hire some people.

Admittedly, they may not hire very many people: 200 at this facility, 150 at that. But you have to tally the indirect jobs too! Or better yet, let me and my ingenious accountants tally the jobs for you. Mmm. 200 plus 150 plus this number I’m pulling out of my . OK, that makes 20,000. May I count on your vote?

No? But Dalton McGuinty apparently expects that a slight variant on the plan will work for him.
On Friday, the Ontario Premier delivered a stinging partisan speech at the Flextronics solar panel factory in Newmarket, Ont. There he warned that if his government is defeated, the factory will close.
But if that claim is true, think what it means for the 13.2 million Ontarians who do not work for Flextronics. If true, McGuinty’s claim reveals that the only reason those Flextronics jobs exists is that his government has given the factory a deal that would be acceptable to no other buyer on planet Earth. This is supposed to be an argument in favour of McGuinty’s re-election?

At enormous cost to the Ontario taxpayer and electricity user, the McGuinty government has joined together two unrelated ideas into one disastrous energy policy:

Idea 1: Ontario should pay the price to shift from coalfired electricity to wind and solar pay.

Idea 2: Ontario should subsidize companies that manufacture wind and solar generators. This is the so-called “green jobs” strategy, and a moment’s thought shows how foolish it is.

Take a look at Idea 1.

Even under the best case scenario, the shift from coal to renewables will be very expensive. Wind power costs approximately three times as much as coal power. Solar can cost up to 10 as much as coal. Facing those huge costs, how does it make sense to add a whole extra layer of costs to subsidize the companies that make the equipment? Given that the operating cost of the equipment is so extremely high, wouldn’t you at least want to buy the equipment itself as cheaply as possible?

Now look at Idea 2.

OK, suppose you get sold on the idea that Ontario should subsidize the manufacture of solar panels and wind turbines. It’s crazy, but maybe you’re just that kind of a guy. In a different era, you’d have traded the family cow for a handful of magic beans. How does it make sense to multiply your manufacturing subsidy with an additional subsidy?

If you’ve made the decision to create jobs by subsidizing industry, why not try to recoup – or at least mitigate – the cost of the subsidy by exporting the product? There are other jurisdictions that have decided to pay the extra cost of operating solar. Why must Ontario pay both the cost of operating solar and manufacturing solar? It’s like being ripped off by a cab driver – and then calculating a 15% tip based on the over-charge.

The whole concept of “green jobs” is utterly misplaced. As the world shifts from fossil fuels to new energy sources, the whole structure of employment will change. Why aren’t all those new jobs regarded as “green jobs”?

The short answer is that the “green job” slogan has always been a ruse, an attempt to repackage vote-buying subsidies to industrial employers as some kind of boon to the environment. It’s not. The boon to the environment comes from green energy itself. Unfortunately, green energy at present still costs much more than fossil-fuels energy.

You sometimes hear it said that jurisdictions like Ontario must pay the subsidies to create a solar-panel industry or else, otherwise, the Chinese will do it.

To which the best answer is: If the Chinese are fools enough to sell Ontarians solar panels at less than the cost of making them, then Ontarians would be fools not to take their money. A good start would be to fire and replace the Premier who committed this foolishness.