The Woke Street Journal? Three ways The Wall Street Journal has lost the plot on energy
I’m not generally a fan of calling anything I disagree with “woke,” but in this instance, the headline was too good to pass up.
On November 27, 2023, Ed Ballard of the Wall Street Journal (WSJ) wrote an article entitled “Now for Some Good News About Climate: Costs for renewables have plummeted and growth is exceeding expectations.”
Unfortunately, the piece reads more like a Sierra Club press release than a clear-eyed assessment of challenges that are currently mounting for wind turbines, solar panels, and electric vehicles. Here are the three most egregious examples of how the WSJ has lost the plot on energy. The article:
- Handwaves away the massive government subsidies that wind and solar receive.
- Omits the fact that wind and solar prices have been rising for the last two years, essentially wiping out a decade’s worth of cost declines.
- Neglects to mention that falling electric vehicle (EVs) costs play a central role in automakers losing money hand over fist in their EV divisions.
Whopper #1: Subsidies are no longer a primary driver of growth for wind, solar, and electric vehicles
Ballard wrote:
“Subsidies drove early growth in wind and solar, then technology refinements and large-scale manufacturing made them cheap. Lithium-ion batteries, which power cars and store electricity on the grid, plunged in price, too.”
“The scale of the development, mostly owned by renewables company Longroad Energy, is part of a staggering surge in renewable energy. Driven by falling costs and better technology, growth in renewables has consistently exceeded expectations.”
Amazingly, the article talks about planned installations for wind and solar but somehow fails to mention that much of this planned capacity is completely dependent upon the massive subsidies passed in the so-called “Inflation Reduction Act,” which is the largest wind and solar subsidy package in U.S. history.
The Biden administration initially claimed that the IRA would *only* cost $369 billion over ten years, but Travis Fisher, the director of policy at the CATO Institute, argues these subsidies could exceed $2.5 or 3 trillion and exist in perpetuity because the subsidies were enacted as permanent law, only to expire when specified emissions targets are met. This could mean that some provisions will last well beyond the 10-year budget window.
Whopper #2: Wind and solar costs are falling
Ballard wrote:
The average cost of solar power fell nearly 90% between 2009 and 2023, with onshore wind declining by two-thirds, according to BloombergNEF. If costs continue to fall as installations increase, “the policy and finance spheres should prepare for a rapid disruptive transition,” wrote academics in the journal Nature Communications last month.
As Mitch and I recently wrote, wind and solar costs are rising, not falling.
Prices for wind and solar electricity continue to climb despite the passage of the so-called Inflation Reduction Act (IRA), which renewed and expanded federal subsidies for these energy resources.
The graph below shows unsubsidized wind prices rose from $39.12 in 2019 to $62.91 per MWh, a nearly 61 percent increase, and solar prices rose from $70.46 in 2020 to $103.83 in 2023, an increase of 47 percent. The rising prices stand in stark contrast to common claims made by wind and solar advocates that these sources of electricity will always get cheaper.
In other words, rising wind prices have virtually wiped out ten years of price declines since 2013, and solar price increases have wiped out five years of falling costs.
It’s also important to remember that these prices do not include other critical factors for running a system on wind and solar, such as additional transmission costs or the cost of natural gas or battery backup. As a result, the costs discussed in Figure 2 do not represent the full system cost of using more wind and solar.
Whopper #3: EV costs are falling, so prices are falling
Ballard wrote:
Similar [cost] declines are starting to reshape transportation. EV costs are falling, and infrastructure is improving. The total cost of ownership of small and midsize EVs is now cheaper than gasoline-powered vehicles in China and Europe and could hit that point in the U.S. next year, according to the Economics of Energy Innovation and System Transition project led by the University of Exeter.
In this view, renewables, batteries and EVs will become more popular as they get cheaper and better. Emerging green-energy technologies such as hydrogen, which is benefiting from government support and a surge in private investment, could follow the same path.
This explanation of EV markets might be plausible if automakers all over the world were not hemorrhaging cash. On his Substack, Robert Bryce notes:
Ford reported an operating loss of $1.3 billion in its EV division during the third quarter. That translates into a loss of $62,016 for each of the 20,962 EVs it sold during the period…
The third-quarter loss on the EV business of $1.3 billion, combined with a $1.1 billion second-quarter EV loss and a first-quarter EV loss of $722 million, means that FoMoCo has already lost about $3.1 billion on its EV business this year. As I noted in these pages in July, the company said it expected to lose $4.5 billion on its EV business in 2023
In its October 26 press release, Ford provided an additional comment on the EV losses, saying, “According to the company, many North America customers interested in buying EVs are unwilling to pay premiums for them over gas or hybrid vehicles, sharply compressing EV prices and profitability.”
Bryce’s article aptly describes that EV prices aren’t falling due to some technological breakthrough that makes them cheaper to produce but because people are not willing to pay enough for these vehicles for the automakers to break even, so they sell them at a loss.
Conclusion
The Wall Street Journal’s newsroom has sadly lost the plot on energy and environmental issues, which is why it produces content that does not withstand its first brush with scrutiny.