Tuesday, March 13, 2012

Spooning for McGuinty - battling an Act of Hudak

Ontario PC leader Tim Hudak introduced a bill to eliminate the Feed-in Tariff (FIT) Program and restore local control over local issues; the "The Affordable Energy and Restoration of Local Decision Making Act."  It must be good, judging by the weakness of the arguments against it.  The Canadian Wind Energy Association (CanWEA) issued a news release titled "Proposed Act would create significant economic uncertainty, put local jobs at risk."  If the field of economics had Razzie awards, the CanWEA release would be in it's hall of shame.

Ontario may not be booming economically.  I throw that out there in case people are confused by the contrast between the flow of investment CanWEA notes, and the data on unemployment, GDP, and government finances.  The quoted reference to how successful the FIT program is in attracting investors is Robert Hornung, the President of CanWEA.  In a province of 12 million, that has bled hundreds of thousands of manufacturing jobs, he quotes "Hundreds of much-needed jobs are being created ..."

On pricing , the Environmental Commissioner of Ontario is cited as an authority via a blog entry he made a year ago.  Mr. Miller is economically illiterate - which isn't surprising as his educational credentials are in Biology and plant ecology.   The price of electricity (the commodity price being the global adjustment plus the Hourly Ontario Energy Price) did rise over 10% in 2011 - a rise somewhat masked from residential customers by the election bribe of the Ontario Clean Energy Benefit.  Mr. Miller's blog entry was never relevant, and one year later is well established as being irrelevant.

CanWEA then cites Pembina's "Behind the Switch" report - Pembina being an organization that collects a significant amount of their revenue from pushing wind.  The report is again written by folks without economic credentials.  I criticized the report when it came out last summer, for many reasons, but there's no reason to go into the full criticism because, as with the Miller reference, the passage of 9 months have seen the assumptions of increasing natural gas pricing not only unfulfilled, but the best forecast going forward see the report's assumptions as false.

The final reference cited, by CanWEA, is to the Clearsy Advisors report "The Economic Impacts of the Wind Energy Sector in Ontario 2011-2018" - a report stored on CanWEA's site, because it was a report commissioned by CanWEA.    They commissioned Clearsky to produce a report for them very similar to the report Clearsky did the previous year for the solar industry.  A foundation for the arguments in both reports is the higher number of "Person-Years of Employment per GWh Produced" required for each source - the figure being highest for solar, and second highest for wind.  This, finally, is in the realm of economics.

There's a rich history of mocking the argument, with a story similar too:
An economist visiting a foreign country is shocked to see men working with shovels in creating a canal.
"Why don't you get bulldozers?" he asks
The answer is that bulldozers would kill jobs, and jobs are important above all else.  With shovels far more people are required than if machinery is used.
After a short pause, the economists remarked;
"Then instead of shovels, you should give them spoons"

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