Robert Bryce of the Manhattan Institute explores the costs associated with renewable energy mandates.
Some of America’s most prominent politicians want national mandates for renewable electricity. In addition, over the past seven months, three states—California, New York, and Oregon—have instituted plans that will require utilities to produce 50 percent of the electricity that they sell to customers from renewables. The politicians backing these measures claim that such mandates will help reduce customers’ bills and create jobs.
Had these politicians considered the surge in electricity costs that have occurred in Europe in recent years, they might have been less eager to push such mandates. Indeed, the three EU countries that have been the most aggressive in pursuit of renewable energy—Germany, Spain, and the U.K.—have all seen their electricity rates increase more than other EU countries. Further, Germany and the U.K. are seeing job losses due to high energy prices.
- Between 2005, when the EU adopted its Emissions Trading Scheme, and 2014, residential electricity rates in the EU increased by 63 percent, on average.
- Over the same period, residential rates in the U.S. rose by 32 percent.
- Industrial rates in Europe have increased about twice as quickly as in the U.S.
- EU countries that have intervened the most in their energy markets—Germany, Spain, and the U.K.—have seen their electricity costs increase the fastest. During 2008–12, those countries spent about $52 billion on interventions in their energy markets.
- During 2008–12, Germany’s residential electricity rates increased by 78 percent, Spain’s rose by 111 percent, and the U.K.’s soared by 133 percent.
- In 2016 alone, German households will be forced to spend $29 billion on renewable electricity with a market value of $4 billion—more than $700 per household.
- The residential electricity rate increase in Germany has been 13 cents per kilowatt-hour—an increase larger than the average cost of residential electricity in the U.S. (12.5 cents).
- While European countries have succeeded in creating jobs in the solar and wind industries, their energy policies have also resulted in significant job losses elsewhere.
- Germany’s energy minister has warned that the continuation of current policies risks the “deindustrialization” of the country’s economy.