Thought you might like to think about something completely unrelated to the market carnage… If you’ve followed the Presidential campaign at all, no doubt you’ve heard the candidates make bold promises about “green jobs” and their potential to replenish the hollowed-out manufacturing sector of the economy (see: death of GM). Now of course, we’ll be thrilled when we see some genuine technological breakthroughs on a scale capable of reducing our use of carbon-based fuels. But politicians are missing the point when they talk about jobs. In fact, jobs are just about the worst thing to focus on. Geoffrey Styles (via Knowledge Problem) takes a look at Obama’s desire to see 5 million green jobs, and what that suggests about the future of the energy sector:
As of last year, the US oil and gas industry employed 1,772,000 workers in all categories, spanning exploration & production, refining, transportation and distribution. Nor are they all engineers and highly-paid drilling specialists. Nearly half this figure was associated with employment in service stations. Collectively, these 1.8 million people produced, processed and delivered fuels carrying 33 quadrillion BTUs of energy, or “quads”, to US consumers and businesses. That’s a third of total US energy consumption and 46% of US energy production. On average, it equates to 18.6 billion BTUs per worker, or 3,100 barrels of oil equivalent each, annually.
In order to come up with a comparable productivity metric for renewable energy, we need to make some assumptions about how much this sector will produce when it reaches its anticipated employment of 5 million Americans. It must be a lot more than the 1% or so of electricity and 7% of gasoline currently supplied by wind, solar power and ethanol. If we combine the 36 billion gallons per year of biofuel targeted for 2022 under the federally-mandated Renewable Fuel Standard with the 20% of net electricity generation from wind by 2030 posited by a recent DOE study, as a proxy for all new renewable electricity, the total equates to roughly 14 quads per year. And that’s giving the kilowatt-hours from renewable electricity the benefit of a gas-fired turbine heat rate, rather than the normal engineering conversion, which is 2/3 lower. The resulting productivity figure works out to 2.8 billion BTUs per green energy worker, or 470 barrels of oil equivalent per year.
On that basis, we should expect that the average energy productivity of this huge new renewable energy sector would only be about 15% of the productivity of the current oil and gas industry.
Now, it’s hard to imagine that this is what Obama has in mind, and in fairness, McCain has made very similar promises, so this isn’t a partisan issue. But it’s symptomatic of a misguided focus on jobs, rather than efficiency or productivity. As an old friend of ours used to say, if you want your energy sector to produce a lot of jobs, just power the country with a giant wheel for everyone to turn. It’d be pretty inefficient, but at least unemployment wouldn’t be a problem.
Business Insider Emails & Alerts
Site highlights each day to your inbox.