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Posts Tagged ‘Terence Corcoran’

Terence Corcoran writes in this month’s edition of the Financial Post Magazine that government has no place trying to figure out which business will work best: they only mess things up. This echoes University of Toronto pr0fessor Dr Michael Trebilcock who has long criticized the Ontario government’s boosting of wind and solar as trying “to pick technological winners” which he says is doomed to failure.

Corcoran looks to classical economic theory for his advice. Recalling Adam Smith’s 1776 The Wealth of Nations, he says, “Trade takes place on comparative advantage among nations, making both sides winners, including importers. In economic trade, every horse wins. To try to rig the race is logically doomed.

“Another bit of anti-fad advice from Adam Smith is this: ‘No regulation of commerce can increase the quantity if industry in any society…It can only divert a part of it into a direction into which it might not otherwise have gone.’

“The green jobs theory is an attempt to do exactly what Smith warned against. In Ontario, home of North America’s most ambitiois green-energy program, the faddists claim the multi-billion-dollar subsidy regime for wind and solar power will create thousands of desperately needed new jobs. While it’s true that spending billions of taxpayer dollars on solar power would create jobs in the solar industry, those billions will have to come from somewhere. To use Smith’s word, they will have to ‘divert’ the money from electricity ratepayers. As the dollars are diverted, they will ultimately result in thousands of lost jobs in other sectors of the company.

“The green jobs fallacy has been exposed in Europe and the United KIngdom. A new study released last month by Verso Economics, a research firm based in Scotland, found that for every job created in the U.K.’s energy sector, 3.7 jobs are lost elsewhere. Whether that number is precise or not is beside the point. Smith’s economic principle holds that a non-market intervention that forces subsidies and benefits on uneconomic development cannot create jobs and development.

“That, in fact, is the simple but boring lesson to be drawn from all economic development fads. New growth, new jobs and econimic development cannot be created by destroying growth and jobs elsewhere.”

northgowerwindactiongroup@yahoo.ca

The North Gower Wind Action Group Inc. is a community group representing hundreds of families in the North Gower-south Richmond area of the City of Ottawa, and is a member of Wind Concerns Ontario Inc.

Follow us on Twitter at northgowerwind.

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Financial Post editor Terence Corcoran writes about what the Ontario government is doing with taxpayers’ money in the interest of being “green” and creating a “clean” power source (except, we already had one, nuclear at about 50%, and hydro) that will also somehow miraculously create 50,000 jobs.

Note: a caller to CFRA yesterday asked, why isn’t the money going to help people do small-scale energy-saving or energy-producing projects at home? Point taken: small-scale solar and wind, also geo-thermal, could help conserve power but it is too expensive for most people…why not help with that?

Terence Corcoran: Ontario burns up more green cash

National Post

National Post

A massive solar energy project in Sarnia, Ont.

  February 24, 2011 – 7:46 pm

Ontario’s green jobs come at a cost of up to $207,000 each

North America’s only feed-in-tariff smokestack, a renewable energy program that burns money to generate electricity, announced fresh incinerations Thursday. The Ontario Power Authority (OPA), a euphemism for the Liberal Cabinet of Premier Dalton McGuinty, said it has signed contracts worth $3-billion with suppliers of wind and solar power.

Ontario Energy Minister Brad Duguid, who issues all the Cabinet directives telling the power authority what do to, said new contracts with a handful of subsidy-seeking corporations are inspired by a higher authority. “There’s no doubt Ontario has stepped up to Obama’s challenge, and together we’ve become a global clean-energy powerhouse,” Mr. Duguid said.

Exactly what U.S. President Barack Obama has to do with squandering billions of Ontario taxpayers’ dollars wasn’t clear. The intent, likely, is to take the spotlight off the McGuinty government. This is Ontario’s second major allocation of wind and solar power contracts under its feed-in-tariff scheme. As a growing number of Ontario voters have come to appreciate, wind and solar power don’t come cheap.

For $3-billion, the OPA said Ontario electricity consumers will get four wind farms with a capacity of 615 megawatts (MW) and 40 solar power projects with a capacity of 257 MW. Total official capacity: 872 MW, assuming the winds blow and the sun shines. They don’t, most of the time, which reduces the actual output from those cash-burning operations to about 200 MW.

The economics of wind and solar are so bad that the power authority’s news releases tend to avoid getting too deep into the numbers. Assuming the new facilities do consistently produce 200 MW, that would be enough electricity to power 200,000 homes in the province. At $3-billion, that works out to a capital investment of $15,000 per home — a lot of sunk capital per home for electricity.

For about a third of the cost, say $1-billion, local energy companies could build a gas-fired generating station that would actually produce 872 MW of electricity. Gas plants require inputs — gas and labour — when operating. But even after factoring in operating costs, the price of electricity from gas is currently around 7.5¢ a kilowatt hour, a bargain compared with the prices Dalton McGuinty’s Cabinet has guaranteed to pay wind and solar operators: 13.5¢ a kWh to wind farms and 44.5¢ to solar plants.

To draw attention away from these numbers and their billion-dollar subsidy implications, the OPA and the government — and the giant corporations who aim to make a killing off these deals — prefer to talk up job numbers. “These projects,” said the OPA news release, “represent an estimated 7,000 direct and indirect jobs.”

What do 7,000 direct and indirect jobs mean? More important, what are Ontario ratepayers/taxpayers getting for the massive cash infusion into renewable power? Bruce Sharp, a consultant at Aegent Energy Advisors, did some rough estimates. “If you take the 7,000 direct and indirect jobs at face value and assume they are manufacturing and construction jobs with a duration of two years, then we have 14,000 man-years of such jobs,” Mr. Sharp said.

Another assumption is that the wind and solar operations require some ongoing manpower over the next 20 years. “I made some wild guesses and came up with an estimate of 650 ongoing operating and maintenance jobs, for a 20-year total of 13,000 man-years.” The total number of jobs, therefore, is about 27,000 man-years over 20 years.

Over that 20-year period, Mr. Sharp estimates, electricity ratepayers will be paying higher costs — or subsidies — worth somewhere between $4.1-billion and $5.6-billion. Average subsidy for each of the 27,000 man-years of work: between $152,000 and $207,000.

No account is taken of the jobs lost in the vast transfer of money from the pockets of ratepayers to the solar and wind industries. Overall, there are no employment gains in any of these artificial industries.

Also lost in the verbal dance of government officials are the national and international corporate interests who are cashing in on the green-energy bubble and the climate-change crusade. Companies like SkyPower Ltd., self-described as Canada’s leading solar-energy company. It landed 13 of the newly awarded Ontario solar projects, totalling 148 MW or about half the 257 MW of new capacity. At $6-million per MW, SkyPower is looking at investing about $800-million in the project.

SkyPower has a history that includes being a unit of the now defunct Lehman Brothers, the New York financial crisis leader that had a disproportionate interest in riding the climate-change bandwagon. After surviving that debacle, SkyPower emerged to find new backers, including Deutsche Bank, the German financial powerhouse that recently released a distorted report that misrepresented climate science, as a vehicle to promote its green lending apparatus.

Renewable energy may seem like an energy play to some, but it often looks more like a real estate game. One of the other contract winners was Penn Energy Renewables Ltd., subsidiary of a real estate company based in Pennsylvania. Deals are constantly being announced among companies, with large firms buying small solar operators. One reason may be the rapid write-offs allowed under tax laws for large companies that have the ability to write off against other income. Such write-offs can apparently raise the annual return on investment to as much as 22%.

Whatever the numbers, Ontario’s renewable energy tariffs are creating a business sector built on subsidies and on the backs of taxpayers and ratepayers. No real net jobs are being created, the costs are high and the impact on climate is too small to measure — so small that the government has never produced a carbon accounting.

…..

No account is made of the lost productivity when people become ill from the turbines, and no account is made of the lost property values.

northgowerwindactiongroup@yahoo.ca

Please view other Eastern Ontario community group websites:

http://southbranchwindoppositiongroup.wordpress.com

http://sites.google.com/site/beckwithresponsiblewindaction/

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Subsequent to editor Terence Corcoran writing about the complex situation of Ontario power generation and the fees being charged to consumers, several readers wrote in to the National Post, none too happy about what’s going on. And none of them are facing giant industrial wind turbines next to their homes, either.

Here are excerpts from some of the letters (full text is available online at nationalpost.com):

New power not needed

Re: Power failure, October 8. You couldn’t be more right about yet another government fiasco…

I’ve been watching the Ontario Power Generation website for the past two years. On the site they show what they are currently generating and compare it to their capacity. As of 7:30 a.m., OPG was generating approximately 9,700 megwatts and their stated capacity is 19,000 MW, which, incidentally, is down substantially from their 2008 stated cap[acity of 27,500 MW (probably due to shutdowns for upgrades, etc.). This means that during this morning’s peak usage period, Ontario was consuming approximately half of its generating capacity.

Even during the summer’s heat waves, we barely ever exceeded 60-70%. Ideally, a power producer should try to be at 90+% of capacity in order to use its assets efficiently (maybe even make some profit?). They should be encouraging people to consumer power, given the excess capacity.

With most of Ontario’s manufacturing industries at either 50% capacity (at best) or already gone for good (take a drive through the industrial park in Mississauga), there is absolutely no need for any new capacity, eve less so at prices only an idiot would agree to pay; why not just buy Quebec’s or Michigan’s excess power as necessary?

I don’t suppose OPG will be announcing any layoffs to try to size its business in accordance with the current economic climate and maintain fiscal stability … didn’t think so.

Glen Blenkarn, Pickering

After reading Mr. Corocran’s shocking summary of the present Ontario Liberal government’s green energy initiative, I realized that an important factor had been omitted, which suggests the overall costs will be higher still.

Mr. Smitherman and Mr. McGuinty have funded the entire project, coyly entitled the “Green Energy Act,” with borrowed money. This means that interest payments on the financing will push electricity prces up even higher than those predicted — much higher. Just how does Mr. McGuinty expect this dizzying financial burden to be repaid? Feed-back tariffs? Rebates? The provincial government will be forced into playing a very high-stakes shell game (read: increased taxes), for however you choose to slice it, it’s all taxpayers’ money anyway—spent before it has been earned.

Martin Bender, Ottawa

I believe the National Post made an error in publishing Terence Corcoran’s expose of George Smitherman’s actions as environment minister in the Financial Post. The fact that the programs Mr. Smitherman implemented will cause hydro rates in Ontario to rise 65% in the next five years affects every individual and business in this province. Something so punitive to the economy and well-being of the residents, should be on the front page of the National Post.

I suggest this makes the eHealth mess he instigated look like chump change.

Anne Robinson, Toronto

To contact the North Gower Wind Action Group, email northgowerwindactiongroup@yahoo.ca

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