NREL and its role on Vinalhaven: much ado about nothing

Fox Islands Wind has, from time to time, summoned representatives of the National Renewable Energy Laboratory to lend its gravitas to the wind turbine controversy on Vinalhaven. Robert Michaels recently addressed NREL in a report:  “The Green Jobs Fallacies” and it is interesting to read what he has to say about NREL. (The reader comments are excellent. Especially with respect to the near-total absence of real local economic benefits once the turbines are constructed and the workers – from away- melt back to where they came from.)

Government Modeling of Job Creation

Much federal research on both the technology and economics of renewables is in the hands of the National Renewable Energy Laboratory (NREL), where a now-standard computer model of the economic impact of renewable projects originated and continues to be maintained.

During my appearance at a 2010 hearing before the House Energy and Environment Subcommittee the discussion turned to what was known about the effects of renewables on unemployment.  After a representative of NREL testified about the optimistic findings of that standard model, known as JEDI (Job and Economic Development Impact), I commented that its use was entirely inappropriate.

I noted that JEDI is structured, by NREL’s own admission, in a way that makes any outcome other than job creation mathematically impossible. It is thus a worthless tool for analyzing the actual employment effects of renewables, because it can only produce favorable ones. [1] NREL’s representative disputed my statement, and that person and I agreed to submit supplemental testimony on the matter. .[2]

As I detail in that testimony, JEDI is one of a large class of “input-output” models that analyze the effects of a project by examining the payments its owners make to workers and suppliers of materials.  The monies they receive will in part be re-spent on other goods, and a “multiplier” effect  brings further increases in incomes, outputs and employment across potentially many industries.  I noted that

[T]here is nothing in the model that could conceivably decrease employment or output in other sectors of the economy.  Any project consider by JEDI, no matter how efficient or inefficient as a source of electricity, will show a positive effect on employment.  That increase may be large or small, but we can be certain that it will not be negative.

I further noted that most of the effects will be transitory, since most of the positions created will be in construction rather than operation.

JEDI’s creators appear to have consciously chosen to avoid discussing the sources of the workers or the funds for projects under study.  Even if there is a vast pool of unemployed workers in the project area who just happen to have the right skills, we can say nothing about its effect on overall employment.

JEDI does not net out jobs lost due to taxes paid by consumers and businesses elsewhere that they cannot spend as they wished to.  Even if the project is funded by private or public bond issue, alternative projects with their own employment consequences could have been undertaken.  It is not even enough to have workers in the project area with the right skills, because net increases in employment usually happen only if those persons have also been suffering long-term unemployment.

NREL’s  disregard of elementary economics and continued reliance on this model is remarkable, particularly in light of its’ creators’ acknowledgments of its inadequacies:

On occasion [the creators] have cited the works of others who use more complex models capable of forecasting both job creation and job destruction.  Such models can incorporate factors that include responsiveness to higher power prices, reductions in employment in conventional power, and the ‘crowding out’ of other capital spending by increased investment in renewables.  Sometimes such models produce negative effects on employment in the long run.  NREL’s researchers are thus aware that other models that capture important complexities are available (or they could surely create their own).  For unknown reasons, they instead persist in using a model that can produce only the single result of job creation from renewables.

The “green jobs” claim is logically insecure at best, and models like JEDI mask that insecurity by invariably finding that the jobs are created.  Interestingly, however, I am aware of no published research in which the predictions of JEDI or a similar model for some project have been compared with the actual results.  Apparently the model’s own creators also take its claims on faith, and that faith appears to be without foundation.

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