One billion euro per year with no gain

With growing amazement I watched the NOS news bulletin of October 5 (Dutch). I couldn’t believe my eyes. I didn’t expect hearing in the mainstream media that the build of a wind farm at sea would have no environmental gain, but would just cost society money, a lot of money. This is how the news was introduced (translated from Dutch):

The construction of large offshore wind farms delivers barely environmental gain now, according to a study of offshore wind energy commissioned by the Ministry of Economic Affairs. Because by European agreements, the emissions from dirty power plants stay the same despite the extra windmills. The result is that offshore wind costs society now more than it brings in, even if you include the effects on health and environment. The report calculates a loss of more than 5 billion euro.

This was the conclusion of the CPB (“Central Planning Bureau” of The Netherlands). They published a cost-benefit analysis in which they concluded that there will be no environmental gain in building three wind farms at sea, although they would cost a lot (1 billion in subsidies per year).

The reason they see (translated from Dutch):

It seems contradictory, but the researchers are certain: even if you fill the whole sea with windmills, it will not reduce the emission of harmful CO2. The three large wind farms are necessary to make a larger part of our energy sustainable. It was agreed in the energy agreement. But in the rest of Europe the dirty power plants keep on running, the researchers say. That’s because of another environmental measure, the system of the so-called emission rights. Through this system, the permissible total CO2 emissions in Europe is fixed. Therefor the Dutch windmills will not matter much in Europe.

It was brought as if only the ETS was the problem, giving the impression that wind energy production at sea is profitable and the issue is just with the ETS. But I think that the ETS is only part of the story.

Nothing about the intermittent nature of wind energy. Nothing about the problem fitting in intermittent energy in the continuous working grid. Nothing about the need for backup power plants or some kind of storage. Nothing about subsidies stifling innovation. Nothing about subsidies pushing other energy sources out the market by making them unprofitable.

What strikes me as odd is that according to this news bulletin this is the first time in 10 year that the cost-benefit analysis is made. It seems unbelievable: only after 10 years a cost-benefit is made! The more odd is the reaction from the Minister Kamp (Dutch Minister of Economy) as seen in De Telegraaf: Wind parks costs 5 billion (translated from Dutch):

Kamp talks about “an unfortunate misunderstanding” from the CPB. He assumes that the European emissions trading scheme will change and that wind farms will soon save eventually a total 4.2 billion compared to previous plans. The Minister designated three areas for the construction of wind farms.

That is a hallucinating to read. It is a odd way admitting that the wind farms currently have no gain. The Minister seems to assume, yes, assume, that the ETS system will change and then there would be profit. On that assumption he is gambling with tax paper money, one billion a year. In a normal world, wouldn’t one wait before making huge investments until one is sure that this ETS scheme is changed in the right direction? Apparently that seems not what the Dutch Minister wants to do.

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2 thoughts on “One billion euro per year with no gain

  1. eSell

    I’m not as well informed as I would like to be about these types of emissions trading systems, but they seem like a really bad idea. Either you produce emissions or you don’t.

    Of course wind farms help the environment, or they do if they reduce the amount of fossil fuels that need to be burned in order to meet electricity demands. But it is sounding like they’re being built for the wrong reasons–to be profitable in some sort of ETS deal.

    Reply
    1. trustyetverify Post author

      I also don’t think it is a good idea. That the ETS doesn’t reduce emissions is not really a secret, it is known for some time. Even the reactions that condemned the news story agreed with it (see next post). The issue is that those emission rights don’t get withdrawn when fossil fuel plants cut emissions or renewable energy plants are build. This means that those rights become cheaper, which means more incentive for other power plants to emit more. Therefor those wind farms will not make any difference when looking at emission reduction. The theme of the post was that although it was known that building these wind farms wouldn’t reduce emissions and cost a lot of (tax payers) money, yet the Minister was eager to continue with the plans. Hoping that the ETS system would change somewhere in the future.

      That wind farms help the environment is not all that sure. Indeed, I think you are right saying they do IF they reduce the amount of fossil fuel used. They have to be integrated into the grid and still need (fossil fuel) backup plants in case there is too little wind. Just adding an intermittent energy source to to the grid will not cut it.

      It also has other negative effects. By subsidizing their use, other sources will be put out of the market and the cheapest sources will survive. Problem is that these are the more polluting ways of producing energy, like lignite, coal or older gas plants. We experienced that first hand in our country.

      For all those reasons, including the ETS, I am not really convinced that wind farms help the environment.

      Reply

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