Is the Renewable Energy Industry Nothing More Than a Jobs Program?

— For the most part, it is.

By Julius Sanks

Milton Friedman famously, and probably apocryphally, upon seeing a canal being dug by hand rather than with modern equipment, is said to have remarked: “Oh, I thought you were building a canal. If it’s jobs you want, then you should give these workers spoons, not shovels.”

Whether the tale is true or not, we are now seeing something similar in real life. Over at Grist, journalist Kate Yoder crows that young people are supposedly heading to renewable energy jobs rather than work for the evil fossil fuel companies. Maybe — the evidence she provides is pretty skimpy — but one statistic she provides is interesting. According to her source E2.org, in 2021 the USA employed about 3.2 million people in “clean energy” jobs, and that was 3.5 times more than in fossil fuels. Doing the math, that is about 915,000 working in fossil. I found that difficult to believe.

E2’s report got me wondering about energy production and the associated labor. Labor is, after all, a big part of any industry’s cost. The renewable advocates often crow about how the industries they like are growing, but rarely compare their industries to the competition. Since E2 was talking jobs, I decided to look at actual energy production and the labor to get it. This ignores work that uses, but does not produce, energy; e.g., making electric vehicles or “smart” transmission.

All E2 did was analyze a Department of Energy (DoE) jobs report and publish part of its content. The E2 report includes work that does not directly compare to fossil energy production, but does not seem to do the same thing on the fossil side. For example, E2 cites Energy Star manufacture. An appliance does not care how the electricity it uses was generated. So E2’s analysis compares “apples and oranges.”

The so-called non-renewable sources provide most of our energy. Figure 1 is a US Energy Information (EIA) graph. It does not take any math to see renewable — that is the term I will use from now on, vice “clean” — energy is a fraction of fossil production.

A British thermal unit is a standard unit used to measure energy. By definition, it is the heat required to raise the temperature of one pound of liquid water by 1 degree Fahrenheit at the temperature where water has its greatest density (about 39 degrees Fahrenheit). That is not very much heat, so energy production is typically reported in quadrillions of British thermal units (BTU), or “quads.”

We can address productivity by comparing the British thermal units (BTU) produced to the number of employees in that industry. To do that we need to know our energy consumption by source. These units are in quadrillions of BTU (“quads”).

Figure 1   US production, downloaded from EIA’s web site.

Are the clean energy workers building a power grid, or running a jobs program using shovels, or maybe spoons? Or are the non-renewable industries doing something like that? Are those renewable energy quads produced more efficiently than fossil?

To find out, we must determine how much energy each worker produces for each source. One might think it is a simple comparison. For the most part, that is true. But not always. Although the EIA reports both production and associated manpower, for some renewables it does not use the same terminology. Your tax dollars at work. Manpower reporting also distinguishes between electricity and fuel production. Some other considerations:

•     Biomass, which is lumped together in production, appears in five staffing categories: electricity and four fuel: corn ethanol, biomass, other ethanol, and other biomass. I lumped the staffing together.

•     Natural gas plant liquid (NGPL) is reported separately for production, but is lumped in with all other natural gas for staff reporting. At least, I think that is what the government has done. So that is what I did.

•     There are two types of hydroelectric (hydro) power: conventional and low-impact. “Low impact” in this context means a plant is less environmental destructive than a conventional plant. Low-impact plants have much lower capacity than conventional. As seen in Figure 1, hydro production refers only to conventional hydro. DoE does not report low-impact production, but for some reason it does report staffing. The Low Impact Hydropower Institute (LIHI) has a spreadsheet listing 176 “certified” sites with average annual production of about 555 billion BTU. That’s 0.0555 Quads. No wonder DoE does not report it, but why report the staffing? I’m using the LIHI production and the DoE staffing.

•     Finally, another technology EIA reports on the staffing side is combined heat and power (CHP). These plants are touted as having higher thermodynamic efficiency than conventional plants. Again, the EIA does not report production; but, just to keep an analyst’s life interesting, combines CHP staffing with whatever fuel source the site uses. I did not find any figures for CHP energy production. However, Statista has data on the number of CHP plants: 200. The number of these plants has steadily decreased from 267 in 2010. Most of these plants use natural gas. Find Energy reports 9,352 power plants in the US. With no identifiable production or staffing data and decreasing interest in the technology, I am ignoring CHP as a separate industry.

So, rooting around in lengthy government reports and crunching some numbers, we end up with Table 1. I have added a couple of categories not shown in Figure 1, because the EIA reports do include them. Table 1 pro-rates the energy produced against the total staff count for each sector.

Table 1     Energy Produced Per Employee by Source, 2021

Now, that is a lot of really big numbers. To make the situation easier to understand, here is a graph based on Table 1 data, with energy sources sorted by the annual production of each employee in the sector. Figure 2 divides the amount of energy each industry produces by the number of employees working there. It thus gives us a picture of the relative labor cost for each energy source. A higher value in the graph means a lower labor cost per BTU.

Figure 2     Energy Production Per Employee

And it’s not even close. Each natural gas or nuclear worker delivers an order of magnitude more energy than their competitors. I was surprised at where biofuels land. I speculate ethanol is the reason it does that well. Overall, renewable employee productivity is less than 10 percent of non-renewable productivity, so their attendant labor cost per BTU is much higher than non-renewable.

This is a big reason renewable energy costs so much more than our traditional sources. Of course, labor cost is not the only reason.

The clean energy advocates might want us to think they are building a power grid. But they are actually running a jobs program. Shovels or spoons? Based on the numbers, I would say shovels for some industries, spoons for others.

Julius Sanks is an engineer with experience developing weather satellites and weather forecasting systems, among other things.