12 myths that government-dictated green energy is cheaper than fossil fuels

Originally published: September 19, 2024

Today I will be testifying for the House Budget Committee at a hearing called “The Costs of the Biden-Harris Energy Crisis.” The main point I'll be making is that the policy of government-dictated “green” energy, practiced by Biden-Harris and many other governments, is ruinous. When you shackle the most cost-effective and scalable source of energy, fossil fuels, and subsidize unreliable solar and wind, energy necessarily becomes more expensive, less reliable, and less secure.

In preparation for the hearing, I wanted to see what the witness in favor of the Biden-Harris energy policy, Trevor Higgins of Center for American Progress, would say in its defense economically. I saw that he testified recently on this very topic.

I found his claims in favor of government-dictated green energy to be appallingly inaccurate and misleading, so I wanted to make sure that the elected officials at today’s hearing and anyone else hearing these claims had access to refutations of them.

• Myth: “Clean electricity has become the most affordable source of energy there is.”

  Truth: If this were true “clean electricity” wouldn’t need enormous preferences in the form of subsidies, mandates, and no price penalty for unreliability—and “clean energy” proponents wouldn’t feel compelled to cripple fossil fuels by punishing investment, production, refining, transportation, and use.¹

  In reality, since “clean electricity” from unreliable solar and wind can go to near zero at any given time, it depends on reliable electricity. It doesn't replace the cost of reliable electricity, it adds to the cost of reliable electricity. That's why the more solar and wind we've used as a nation the higher our prices have gotten.

• Myth: Inflation has slowed since the passage of the IRA, so the IRA worked.

  (Higgins: “Since the enactment of the Inflation Reduction Act, overall inflation has slowed by two-thirds, grocery price inflation in particular has slowed by nine-tenths, and energy price inflation has not only slowed but fully reversed and dropped 7 percent. Meanwhile, wages have risen 8.5 percent, far outpacing inflation. Since enactment, total employment has grown nearly 4 percent and economic output is up 10 percent. This is an exceptionally strong record.”)

  Truth: This is a blatantly dishonest example of the “post hoc” fallacy—the first thing happened before the second thing, therefore the first thing caused the second thing.

  The IRA couldn’t have possibly lowered inflation because its significant effects are not in force yet.

  And when the IRA’s effects are in force, they will obviously be inflationary due to its huge subsidies, which will increase our debt burden and therefore inflation.²

• Myth: “investments in clean energy specifically are a primary strategy in the fight against inflation”

  Truth: Subsidizing energy sources that can't compete on a free market is by definition inflationary. It makes us pay more for energy that we otherwise would. And when coupled with restrictions on the most cost-effective form of energy, fossil fuels, it makes us pay far more for energy.

• Myth: “Federal grants, loans, and tax incentives are unlocking record-breaking levels of private investment in building the clean energy economy.”

  Truth: The “record-breaking levels of private investment” consist of investors chasing free money from the government instead of investing in truly cost-effective energy projects.

• Myth: Thanks to the IRA we are “restructuring global supply chains and unlocking a domestic manufacturing renaissance.”

  Truth: Thanks to the IRA Americans will pay a fortune in taxes and inflation to prop up industries that have no prospect of being internationally competitive.

  If we want to be internationally competitive we need to liberate domestic development from the “green energy” movement’s hostility to human impact on nature and therefore human development. Given that under the current administration we cannot even open a promising domestic mining project in Minnesota, there is no chance we can wrestle critical mineral dominance from China this decade or in the next 3 decades.

• Myth: “Fossil fuel dependence renders the daily costs of operating our energy systems vulnerable to supply shocks after extreme weather.”

  Truth: The naturally-stored energy in fossil fuels is available in any weather, which is why they are the centerpiece of reliable, resilient grids in every climate. Meanwhile solar and wind can’t survive the “supply shock” of a calm, cloudy day.

• Myth: “Fossil fuels push electricity prices higher...through the price volatility of the natural gas market”

  Truth: Even when natural gas prices are high unreliable solar and wind can’t compete without special preferences. That’s why forcing solar and wind on us has led to much higher electricity prices than we had when natural gas prices were high.

  If it weren’t for government-dictated green energy, including restrictions on gas production and pipelines, and subsidies for unreliable solar and wind, plummeting natural gas prices would have led us to pay far less for energy than we are today.³

  It is particularly disingenuous for people who are for strangling the natural gas industry to complain about high natural gas prices. This would have been like Tonya Harding criticizing Nancy Kerrigan’s difficulty skating after Harding’s team physically assaulted Kerrigan.

• Myth: “Fossil fuels push electricity prices higher, including through... uneconomic utility investments in coal plants.”

  Truth: Utility investments in coal plants were extremely economic until government-dictated energy shut them down.

  Coal plants are a much, much cheaper way to provide reliable electricity than solar, wind, and batteries are. The only way to make coal a terrible investment relative to solar and wind is to subsidize solar and wind and make the coal investment worthless by shutting the plant down.

• Myth: “Fossil fuels push electricity prices higher, including through...the surge in wildfires exacerbated by climate change.”

  Truth: The main cause of wildfire damage is “green” policies that allow forest “fuel load” to build up in the name of leaving forests untouched.

  No credible projection says the IRA will have any meaningful effect on the conditions of wildfires so to claim that it’s saving us these costs is a lie.⁴

• Myth: “In Texas, for example, wind and solar saved $11 billion in wholesale electricity costs in 2022 alone.”

  Truth: To know the cost of solar and wind one has to look at the full system cost, not the “wholesale electricity costs.” The full system cost of solar and wind has been disastrous for Texas, as evidenced by their total failure to provide meaningful electricity during Winter Storm Uri, which Texans are still paying a fortune for.⁵

• Myth: “The prospect of swiftly declining domestic demand for oil and gas is provoking the industry to build new export facilities, hoping to find overseas markets for liquefied natural gas (LNG).”

  Truth: Industry is not “hoping” to find markets, US natural gas is desperately needed across the world! This includes European countries that desperately need more natural gas to support their unreliable solar and wind capacity on their expensive power grids.⁶

• Myth: “As a report from Energy Innovation has documented, states that are investing in clean electricity, such as Iowa, New Mexico, and Kansas, have seen less increase in electricity prices than states who have remained most dependent on natural gas.”

  This “report” is pure propaganda. Looking honestly at the cost of adding unreliable solar and wind would mean looking at relatively self-sufficient grids that add a lot of solar and wind, such as California’s—which has experienced huge price increases and reliability problems. But the report evades California’s higher electricity prices by absurdly blaming them on wildfires. (“Wildfire costs and risks have significantly increased electricity rates in California.”)

  The “report” instead focuses on states like Iowa, New Mexico, Kansas, and Oklahoma, which are embedded within much larger grids and socialize the costs of unreliability to others. Another example of ignoring socialized costs: the report acknowledges that transmission and distribution costs are rising nearly twice as fast as inflation but misattributes this to things like “grid hardening.” In reality, the high demand for more transmission and storage is driven by the need to enable more solar and wind capacity.

  In addition, recent high natural gas prices are largely a product of government-dictated green energy.

  Natural gas in general has kept electricity prices low, and had we not added so much unreliable solar and wind, the long-term fall in natural gas prices would have made our electricity cheaper.

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