An Economic Analysis of the Green New Deal. Could it work?

     With the start of the new year there Has been  a veritable brouhaha around some of the new progressive house members like Alexandria Ocasio Cortez and others who are long on personality and enthusiasm to turn around the lumbering  cruise ship of the Democratic Party. At the top of their agenda is recognition of the looming spectacle of climate change. Their answer is a brave attempt to bring back the old concept of a Green New Deal first proposed more than a decade ago. The Green New Deal modeled along Roosevelt’s New deal is a legislative attempt to combat rising carbon emissions driving worldwide climate change. Their goal is to radically change the energy mix in the US from one based on fossil fuels to 100% renewable energy by 2030. There have been similar proposals from other states and cities and countries along these lines, notably California going 100% renewable by 2045. This post is an attempt to examine the feasibility of their proposal. The link of their entire proposal is here. I will paste some of the specifics from that proposal .  The proposal is readable and includes a long FAQ about the proposal which I urge the reader to examine.  I have not been able to find any constructive criticism of the  Green New Deal anywhere  so with nothing left to lose I will now jump into the breech and lend my two cents. Here are some of the specifics:

(A) The Plan for a Green New Deal (and the draft legislation) shall be developed with the objective of reaching the following outcomes within the target window of 10 years from the start of execution of the Plan:

                                     i.                    Dramatically expand existing renewable power sources and deploy new production capacity with the goal of meeting 100% of national power demand through renewable sources;

                                   ii.                    building a national, energy-efficient, “smart” grid;

                                 iii.                    upgrading every residential and industrial building for state-of-the-art energy efficiency, comfort and safety;

                                 iv.                    eliminating greenhouse gas emissions from  the manufacturing, agricultural and other industries, including by investing in local-scale agriculture in communities across the country;

                                   v.                    eliminating greenhouse gas emissions from, repairing and improving transportation and other infrastructure, and upgrading water infrastructure to ensure universal access to clean water;

                                 vi.                    funding massive investment in the drawdown of greenhouse gases;

                               vii.                    making “green” technology, industry, expertise, products and services a major export of the United States, with the aim of becoming the undisputed international leader in helping other countries transition to completely greenhouse gas neutral economies and bringing about a global Green New Deal.

(B) The Plan for a Green New Deal (and the draft legislation) shall recognize that a national, industrial, economic mobilization of this scope and scale is a historic opportunity to virtually eliminate poverty in the United States and to make prosperity, wealth and economic security available to everyone participating in the transformation. In furtherance of the foregoing, the Plan (and the draft legislation) shall:

i.                    provide all members of our society, across all regions and all communities, the opportunity, training and education to be a full and equal participant in the transition, including through a job guarantee program to assure a living wage job to every person who wants one;

ii.                    diversify local and regional economies, with a particular focus on communities where the fossil fuel industry holds significant control over the labor market, to ensure workers have the necessary tools, opportunities, and economic assistance to succeed during the energy transition;

iii.                    require strong enforcement of labor, workplace safety, and wage standards that recognize the rights of workers to organize and unionize free of coercion, intimidation, and harassment, and creation of meaningful, quality, career employment;

iv.                    ensure a ‘just transition’ for all workers, low-income communities, communities of color, indigenous communities, rural and urban communities and the front-line communities most affected by climate change, pollution and other environmental harm including by ensuring that local implementation of the transition is led from the community level and by prioritizing solutions that end the harms faced by front-line communities from climate change and environmental pollution;

v.                    protect and enforce sovereign rights and land rights of tribal nations;

vi.                    mitigate deeply entrenched racial, regional and gender-based inequalities in income and wealth (including, without limitation, ensuring that federal and other investment will be equitably distributed to historically impoverished, low income, deindustrialized or other marginalized communities in such a way that builds wealth and ownership at the community level);

vii.                    include additional measures such as basic income programs, universal health care programs and any others as the select committee may deem appropriate to promote economic security, labor market flexibility and entrepreneurism; and

viii.                    deeply involve national and local labor unions to take a leadership role in the process of job training and worker deployment.  

(C) The Plan for a Green New Deal (and the draft legislation) shall recognize that innovative public and other financing structures are a crucial component in achieving and furthering the goals and guidelines relating to social, economic, racial, regional and gender-based justice and equality and cooperative and public ownership set forth in paragraphs (2)(A)(i) and (6)(B). The Plan (and the draft legislation) shall, accordingly, ensure that the majority of financing of the Plan shall be accomplished by the federal government, using a combination of the Federal Reserve, a new public bank or system of regional and specialized public banks, public venture funds and such other vehicles or structures that the select committee deems appropriate, in order to ensure that interest and other investment returns generated from public investments  made in connection with the Plan will be returned to the treasury, reduce taxpayer burden and allow for more investment.

 As you can see this is an ambitious plan that goes far beyond simple measures to reduce CO2 emissions such as a carbon tax and calls for eliminating gender inequality, protection for tribal rights, job retraining for oil, gas and coal workers, universal income and universal health care and other goals. It would take a book to respond to the entire platform and my goal is examine just the energy and economic feasibility of their ideas. The first goal is to:

1. Dramatically expand existing renewable power sources and deploy new production capacity with the goal of meeting 100% of national power demand through renewable sources;                                                                                                                           
2.   Dramatically expand existing renewable power sources and deploy new production capacity with the goal of meeting 100% of national power demand through renewable sources;

It is important to note the phrase : dramatically expand sources.

Here is an exceedingly understandable graph of energy use by source and sector in the US in 2017 taken from the EIA:energy units are in quadrillion btu(10 to the 15^th btu) with percent in parentheses underneath:

­­­­­This graph is worthy of a careful perusal and I will repeatedly refer back to it. As I have mentioned in previous blog posts, the way energy is quantified is confusing and has a myriad of units, For example natural gas energy content is in cubic feet(1000 cubic feet), oil is in barrels, coal is in tons and electricity in kilowatts. All of these energy sources could be and should be converted to a unitary standard of energy which is the joule but alas this is rarely done but the graph above does break it down into percentages which for our purposes will have to suffice. Since we are talking about renewable energy in the Green New Deal, let’s do a breakdown concentrating on just the renewable energy segment. In this case I am talking about just electrical energy.

Electricity consumption is 38% of the energy used  in the US and electricity is generated from fossil fuels, nuke fuels and renewables. Renewables only account for about 1/6(17%) of  electricity generation with the bulk from hydro dams(7.4%), wind(6.3%) all solar(2.6%). The balance of that 17% is accounted for by wood, biomass and geothermal sources. It is no surprise that for the last decade it has been wind and solar growing the fastest but as of a year ago wind and solar only counted for a bit over half of all renewable energy(.524). That means half of the 17% renewable contribution to electricity generation or only 8.9 %(.524X17%). In other words electricity was still over 91% fossil and nuke supplied. Here is a diagram of current renewable electricity contributions courtesy of Gail Tverberg:

So in 10 years the Green plan wants ALL ”national power demand” produced from renewable sources.  The statement does not say just: electricity power demand but ALL national power demand. That means no coal plants, no NG plants, no oil, no Nuke plants………all mothballed or decommissioned in 11 years, all replaced by renewable sources and it will have to be supplied from only wind and solar. Mind you, all the best dam sites are taken and wood, biomass and geothermal sources have long since been maxed out. I think their policy statement must mean just national ELECTRICITY power demand, not all power demand. Obviously the statement needs some clarification because if it is all power sources that would mean no fossil fuels for anything in 11 years…no coke for steel production, no oil for transportation, no NG for fertilizers and so forth. I must assume they mean just electricity generation. Even so, can we go from wind and solar producing 8.9% of national electricity and go to using 100% renewable sources to in 11 years? It should be mentioned that in the world only about 3% of electricity is produced using wind and solar sources. I have read estimates of how many wind mills would be required to get to 100%  and it is in the hundreds of thousands. Solar  in 2017 contributed just 2.5% of electricity generation . The math is relatively simple to calculate how many solar farms or giant 2 MW windmills it would take to get to 100%  and it is prodigious not only in numbers but in dollars, trillions of dollars, and these farms need transmission towers and maintenance support not to mention vast tonnages of concrete and copper and  of course rare earth metals which are 96 % imported(mostly from China). There are a myriad of issues with a plan like this which I will not consider right now but I think that the cost and resource issues are daunting.  The Green Planners would counter that there would be a lot of jobs for concrete companies, trucking and crane companies, power tower companies, solar panel installers and manufacturers etc. I have concluded from reading the data that a plan like this is unaffordable but the bigger question is that: would it be worth it, carpeting limited and largely remote and rural sections of the country with wind towers and solar farms? The biggest problem with wind and solar besides cost, reliability and lifespans is that these sources are INTERMITTENT! The wind blows sometimes and the sun only shines in the daytime. Electricity for heating in winter and cooling in summer is often a mismatch for intermittent sources. Solar doesn’t yield as many electrons in winter and wind in much of the country is weaker in the summer.. The fossil and nuke plants generate electricity constantly and predictably, not intermittently. If you add intermittent sources to the grid you need a base load electricity supply in place to handle the intermittency of wind and solar, increasing when the wind drops and the sun goes down and throttling back when the gales of November come howling. This has not been a serious problem in most locales as long as the wind and solar contribution has been tiny but the utility companies have warned repeatedly that increasing these renewable sources to a large percentage will lead to grid instability, power surges and blackouts. Then there is the issue of subsidies. New wind and solar sources get priority on the grid, preferential PPAs(power purchase agreements) and tax subsidies as well. They may be producing excess power when it is not needed but they get to go to the front of the bus so it is the base load sources that have to adapt.  This means you have to have base load sources with the ability to throttle up and down and divert excesses rapidly and reliably. These base load power plants work best at  a high constant output and running them  at varying outputs is hard on them as well as inefficient. Boilers and turbines like internal combustion engines have an optimum performance envelope and varying this envelope means varying boiler pressures and temperatures, cooling and lubrication pressures and so forth. The green plan wants to totally eliminate fossil electricity generation but that is only possible if there is another source to balance out the flow of electricity to match demand. Their answer is a simple one: battery storage. In theory that would work with enough batteries spread all over the country. We are told that storage batteries are more efficient than ever as the eminent environmentalist Bill McKibbon wrote in a long article in a recent New Yorker. That is true but their  chemical energy density remains minute compared say to the chemical energy density of oil or coal and the cost to replace base load generation would be very high. The  cost of new wind and solar without storage is around 5 cents/kWh but if storage were to be added the cost would soar to 70 cents to $1.10 a KWh according to Rodger Andrews at Energy Matters. The average house in the US uses between 800 and 1200 kWh a month.  My house is between 1000 and 1600 depending upon the season. With solar/battery storage my electrical bill would rise to $700 to $1700/month.­­­!!! Batteries with massive concentrated chemical energy capacity equivalent to fossil energy are one of those promised energy miracles like fusion energy…………always just over the horizon but never delivered. Battery backup is a mature technology and it functions well at the proper scale but the pie in the sky notion that it could be scaled up to country size is ridiculous.

Let’s back up now and try to see the big picture:global climate change brought on by ever increasing emissions. Notice my assumption: CO2 emissions from the burning of fossil fuels is the dominant variable causing global warming. If you consider that assumption a hoax like Donald Trump, then embarking upon a massive attempt to reduce or eliminate CO2 emissions is totally unnecessary and a waste of time and money. What’s more the link between energy consumption and living standards and economic growth is undeniable. Here is a slide from a recent presentation by Gail Tverberg to  the IEEE (Institute of Electrical and Electronics Engineers):

The careful reader will note her tacit assumption about energy consumption and economic growth. This is a FUNDAMENTAL POINT of my blog. Another fundamental point is the link between energy(consumption) and wealth.More than a decade ago I was puzzling over concepts of wealth and money and economics. Where does wealth come from? Why has wealth production grown so much in the last few hundred years? Is there a link between population growth and wealth? What is the common thread among these and many others over the past 200 years in that period we now call the Industrial Revolution? It came to me rather suddenly one day: ENERGY ! That is the link. THE link. Energy has always been the link but what is different in the past few hundred years from human use of energy? The answer is cheap fossil energy. It is that abundance of inexpensive seemingly inexhaustible energy which almost totally replaced muscle energy from humans and animals and allowed the creation of machines and extraction of the earth’s resources using  technology that flowed like river from this new wellspring of energy. Freeing up human and animal muscle energy and replacing it with fossil energy running machines allowed massive  exponential increases in food production for example, which naturally allowed exponential increases in human reproduction. Exponential increases in resource extraction and products derived from these fossil resources followed. Freeing up human and animal hands allowed humans new opportunities to provide services. In just the wink of an eye in the history of human evolution we went from gathering roots and firewood to cook them to stepping down upon the surface of the moon. All this progression in complexity and technology was made possible by unlocking and harnessing the bond energy between three elements: carbon, hydrogen, and oxygen. Bingo! I thought to myself. Wealth flows from that bond energy as does population growth, economic growth, improvements in education and health…………..you name it. The industrial revolution was caused by the availability and utilization of a cheap new energy source. Just one problem was immediately obvious. All this new energy was the lucky consequence of a few hundred million years of algae and fossils percolating down through the world’s oceans where it decomposed and was covered up with sediments and altered by temperature and pressure into oil and gas. On the land a similar process of carbon and hydrogen containing plants fell to the floor of vast forests accumulating and compressing over millions of years into coal and heavy hydrocarbon layers. The problem? These hydrocarbons were FINITE. At the beginning of the Industrial age they seemed infinite but now we know they are finite. Fossil resources are just a few of  the many other non renewable finite resources of the planet. They are not renewable on a scale of human lifetimes. When these resources are gone or too hard to find and extract, the rodeo is over. When the energy from them dries up so does wealth creation, economic growth, economic progress, pocket money…………….the advancement of human civilizations! Whew! Really? That’s it? Yup, pardner. That’s it. But the economists and greenies come scurrying out from behind the trees saying: Don’t worry. Be happy. We get it. If that nasty dirty old coal and oil energy disappears, the market  will just substitute energy from somewhere else. Economic growth doesn’t have to cease. Human advancement can continue using renewable energy. Plus we can now save the planet by stopping burning those stinky things. We don’t have to get our electricity from burning coal, oil and gas  and uranium to boil water to make steam to spin a heavy copper generator. We can get it from the sun and the wind which is a permanent renewable energy source. NOT! WRONG! These so called renewables can only be built  and maintained using fossil energy.  What’s more these misnamed renewables have short life spans, only 15 to 30 years in the case of wind and solar and  somewhat longer in the case of hydro. They can only be built and maintained, decommissioned and perhaps recycled by using fossil energy, primarily diesel fuel. So you see they are not renewable after all. Let’s call them what they really are: expendables or if you prefer NON-renewables. Now back up again and go look at that source/sector graph from the EIA. Even if we could get Tinkerbelle to wave her magic wand PRESTO!CHANGE-O! and move all our electricity production  to “expendables” we have only cut our emissions 38%.  We still have 62% of all our national energy demand being met by fossil resources producing CO2. What does the Green New Deal have to say about that? Here. Read it for yourself:                                                            (1)upgrading every residential and industrial building for state-of-the-art energy efficiency, comfort and safety;

                    2. eliminating greenhouse gas emissions from  the manufacturing, agricultural and other industries, including by investing in local-scale agriculture in communities across the country;

                    3. eliminating greenhouse gas emissions from, repairing and improving transportation and other infrastructure, and upgrading water infrastructure to ensure universal access to clean water;

                    4. funding massive investment in the drawdown of greenhouse gases;

                    making “green” technology, industry, expertise, products and services a major export of the United States, with the aim of becoming the undisputed international leader in helping other countries transition to completely greenhouse gas neutral economies and bringing about a global Green New Deal.

 Easy peasy. If you go through that list of solutions you will see that we will have to insulate all our buildings with what? Insulation derived from fossil derived sources like foam or fiberglass which are “state of the art”? No more industrial agriculture with giant diesel powered tractors and combines tending 50,000 acre wheat farms. We will go local Ag. We will all be like yours truly with chickens, a Jersey milk cow, pigs and sheep  and a big garden. We won’t get our fertilized pesticide laced GMO  produce, meat and milk from  giant farms  in California’s Central Valley carried by semis to Walmart. Sounds good to me. After all that is what we do here at Rendezvous Mountain Farm. But what about all those other poor slobs  in sprawling subdivisions and big city apartments who have to commute to their miserable cubicles on  SUV clogged freeways? Can they go local and grow their own food and slop their pigs like we do in rural Wyoming? There are probably many people who would like to be able to do that and a few who already have but we are stuck with a suburban sprawl gas powered happy motoring model which uses 92% of the oil, 25% of that imported. The Green New Deal says get a self driving Tesla or ride on expanded mass transport. These suggestions are on the surface good ones. After all they are being used in some countries and cities around the world to a very limited extent. For example the average European uses one half the energy of the average American.  I think a minimal goal would be for the Green New Deal to adopt a European Energy standard. The Green Deal says the US can lead the world in manufacturing, inventing and exporting green energy technology to the world. There’s a new job for you and your kids. Now they can finally move out of the basement with their master’s degree in sports communications and finally achieve the American Dream. I won’t go over all the rest of their New Deal program with its laundry list of wishin’ and hopin’. Their plan not clearly stated obviously involves an entire restructuring of the American and world economy, how and where we live and work. Even their specific recommendations are short on specifics. For example if you want to reduce the consumption of a product you have to add a disincentive to its use. You Tax it. Put consumption taxes on products and services using  fossil fuels. Tax gas and diesel and jet fuel . The federal tax on commercial jet fuel is 4 cents/gallon. In Wyoming we add a whopping 5 cents.Commercial air travel is 3% of world CO2 emissions. The simple expedient of adding just $2 or $3 tax to a gallon of gas or diesel would lead to a sudden drop in US emissions. Is this politically feasible?  Talk to the yellow vests in France when they tried that.

    I guess it should be apparent that I think the well intentioned Green New Deal as proposed using vast funding from the Federal Government in similar fashion to Roosevelt’s New Deal has less than a snowball’s chance in hell of getting implemented as written. Here is their answer to how this massive Deal will be paid for:

How will the government pay for these investments?

• Many will say, “Massive government investment! How in the world can we pay for this?” The answer is: in the same ways that we paid for the 2008 bank bailout and extended quantitative easing programs, the same ways we paid for World War II and many other wars. The Federal Reserve can extend credit to power these projects and investments, new public banks can be created (as in WWII) to extend credit and a combination of various taxation tools (including taxes on carbon and other emissions and progressive wealth taxes) can be employed.  

In other words it will be paid for by yet more debt and possibly taxes but you will notice that nowhere in the Green New Deal proposal is there an estimate of the costs. As I have previously written the wealth to fund the New Deal or WW2 and even stupid blunders like Viet Nam came from borrowing and this spending used real wealth derived from where? Fossil Fuels. It can be argued that the Giant Bank bailout of 2008 using QE trillions was a colossal waste of money. It benefited only the banks and large corporations(like the oil companies!) It will never be paid back. My guess is that an estimate of the cost of a Green NEW DEAL would be an order of magnitude greater. I expect someone will soon come up with some estimates which will inform the discussion.Now I will try to conclude this overly long blog by returning to what I see as the challenges facing not just the US but the world : Global Climate Change and the end of fossil fuels.  The only real ultimate guaranteed help for the planet’s heating climate will be the end of fossil fuels and the question is will it happen in time? The planet will benefit from ending the use of oil, gas and coal but it is hard to overestimate the havoc caused by the withdrawal of these energy generating and wealth creating substances to the humans on the planet.

      In order to inform my conclusions I must introduce some concepts that initially may seem somewhat afar from this blog topic but in fact are concepts integral to its understanding. Allow me to introduce Ilya Romanovich Prigogine, a Russian physical chemist  and thermodynamic physicist :

He received the Nobel prize in 1977 for his conceptual theories of dissipative structures, complex systems and thermodynamics, particularly the irreversibility  of complex structures. I have a good reason for closing with Prigogine’s work  which can be difficult to follow even for this blogger who has a degree in chemistry and advanced courses in physics. So stay with me on this. There are many examples of dissipative structures.  Here is the definition of dissipative structures: “A dissipative system is a thermodynamically open system which is operating out of, and often far from, thermodynamic equilibrium in an environment with which it exchanges energy and matter.  Dissipative structures are open systems, they need a continual input of free energy from the environment in order to maintain the capacity to do ‘work’. It is this continual flux of energy, into and out of a dissipative structure, which leads towards self­-organization and ultimately the ability to function at a state of non-equilibrium. Other examples of dissipative systems include turbulent flows, cyclones, hurricanes, lasers and all forms of living organisms.”The definition states that in a thermodynamically open system, a dissipative system is irreversible.  Economists have also embraced the concept and propose that the economy is a dissipative structure. In that sense an economy cannot “un -grow”. I haven’t read this but I think civilizations are also dissipative structures or systems. Dissipative systems rise, organize and fall and in that sense hurricanes are similar to economies or civilizations. If the current world economy is a dissipative structure it is somewhat unique in that it is highly linked and  networked, with all manner of feedback loops and at times displaying chaotic behavior. But like all dissipative structures it relies upon an exchange of energy flows to exist and to grow. But like a hurricane, when the energy inputs are cut, the system disspates or if you will, collapses. I think that will happen to the world economy when the energy inputs from fossil fuels wind down thereby reducing the complexity of the world economic system. I do not know if the writers of the Green NEW Deal have ever heard of Ilya Prigogine.If they have and have bought into Ilya’s theory, they might opine that the system would not dissipate  if it could be kept going and self organizing with an alternative energy source. This could be one scenario. Another could be a partial dissipation and reorganization at a lower complexity or energy level. A third would be total collapse to Armageddon complete with the 4 horsemen of the apocalypse.  I would think the Green New Dealers would favor the first because it offers the panglossian technology loving possibility of BAU and having your cake and eating it too. I favor the second  because it offers the hope that we humans could reduce our energy consumption voluntarily in  a planned  gradual response to withdrawal of cheap energy. My view is that energy is the economy and if energy dissipates, what do you have? Ultimately we humans will have to use renewable wind and solar energy, heating our water and homes and buildings.  Wind energy could run our machines directly or on a human scale generating electricity or pumping water and grinding grain. I think that at least here in the United States, we will have a lot of stranded assets connected with suburban sprawl and the automobile and truck transportation infrastructure. If energy is wealth, then its withdrawal and most especially oil energy, means that our far flung empire of highways and big box stores and manufacturing relying upon distant supply chains and just in time inventory is doomed just like those vinyl clad 4000 square foot McMansions and those 2 hour solitary commutes  to  a cubicle in a 4000 lb suv. The intelligent response is to recognize this scenario as a virtual certainty sometime this century. The intelligent response to global warming brought on by fossil emissions is to reduce those emissions  to  close to zero whether voluntarily or by government prodding or edict.The intelligent response is not just to drive less and fly less but walk more, work more physically, eat better and live simpler, consuming as little as possible of all resources. My depression era mother had an expression I never forgot: “Use it up, wear it out, make it do, or do without.” I have improved the saying:” Fix it up , Use it up. , wear it out or do with out.”

Maybe one of these days I will try to dream up more intelligent responses to this reworking of our civilization and I remain optimistic that many of us will adapt and figure it out. The timeline of  this energy economy downsizing is anybody’s guess but the sooner we as individuals or communities, states or even nations mount  intelligent responses, the easier and more gradual  the adaptation and the less the suffering. My wife says that education of the people is a key strategy and she is certainly correct.  That is why I plug away at this blog trying to spread the gospel from my pulpit, but like Cassandra I feel my warnings will not be heeded.  There are none so blind as they who will not see. I have noticed that the younger generations are getting it. Look at the effect of  Gretta Thunberg,                                                                                                                                                                                                                                                                                                                                                 a Swedish teenager had who sat in front of the Swedish Parliament day after day protesting political inaction in the face of global warming. Her recent address to the UN Conference on climate change, COP24 in Katowice Poland merits watching. In it she chastised world political leaders for ignoring the looming disaster of human caused global climate change. It’s no surprise that it is the young who are up in arms because it is they who will reap the harvest of a ruined world. The old rich guys who caused it all could care less because they will be dead. Plus it will just cost them money.                                                                                                                                                                                                                                                                                                                                                                                                                                                               I am afraid that the BAU scenario of a government funded Green New Deal is doomed not only for the physics and economy based reasons that I laid out, but politically in a divided nation and world, a non starter. I hope instead for scenario #2  where I think some compromise might be possible especially if we can educate enough of the populace to enact emission reduction individually or collectively. The apocalyptic doomer possibility #3 is too horrible to imagine but the intelligent response for that is: hope for the best and prepare for the worst.