The United States should not follow Europe’s example in creating huge subsidies for alternative energy.
A study that examines Spain’s success in creating and retaining jobs in the “green energy” sector contains sobering implications for similar policies in the United States.
The study says that every renewable energy job created by Spanish government subsidies “destroyed” an average of 2.2 other jobs. Each green megawatt deployed – energy from solar or wind power – also “destroyed” 5.39 jobs in non-energy sectors.
In addition, study author Gabriel Calzada Alverez said that only one in 10 jobs in Spain were permanent – two thirds were construction, fabrication and installation jobs, one quarter were positions in administration, marketing and engineering, and only one in 10 were related to maintenance and operations.
In fact, study authors predict that the United States could lose 6.6 million to 11 million jobs if it creates 3 million largely temporary “green jobs.”
“Spain’s experience reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about nine jobs lost for every four created, to which we would have to add those jobs that non-subsidized investments with the same resources would have created,” Alverez said. “The study’s results demonstrate how such ‘green jobs’ policy clearly hinders Spain’s way out of the current economic crisis.”
Alverez also cautions against certain forms of green energy mandates – minimum guaranteed prices. Those mandates, he said, created electricity prices far above market prices and wasted capital.
“Arbitrary, state-established price systems inherent in ‘green energy’ schemes leave the subsidized renewable industry hanging by a very weak thread,” he said. “And, it appears, doomed to dramatic adjustments that will include massive unemployment, loss of capital, dismantlement of productive facilities and perpetuation of inefficient ones.”
Alverez fears a green-energy “bubble” if current policies are continued.
The Spanish model shows that renewables were never feasible based on consumer demand and that renewable energy is “countercyclical in crisis periods.” During bad economic times, investors will find renewables one of the few profitable sectors.
“Yet, it is axiomatic, that as we are seeing now, that when crisis arises, the government cannot afford the growing subsidy cost,” he said.
But that doesn’t mean the United States should stop looking into alternative energy solutions, said Jim Sims of the Western Business Roundtable.
“Congress creates policies, and we’re highlighting this study to say, ‘hey, maybe you should take another look,’” he said. “We’re just trying to debate the policy here – and that means that green jobs are not the salvation for the economy. That’s the presumption – and this is the first time that presumption has been tested.”
The Western Business Roundtable isn’t opposed to research and development – or deployment – of alternative energy, Sims said, but the group says there must be a place for fossil fuels as well – a mix of all available resources.
“There are two parts to this study,” Sims said. “The first is that creating green jobs is going to be good for the economy, which this shows the opposite. And the second is the efficacy of massive government subsidies for renewable energy. That’s also questionable.”
Sims said that the study highlights one of the major efforts of the organization – to have Congress re-examine its priorities based on “real, on-the-ground truth.”
“The arguments for Spain’s and Europe’s green jobs schemes are the same arguments now made in the U.S., principally that massive public support would produce large numbers of green jobs,” Alvarez said. “The question that this paper answers is ‘at what price?’”
Since 2000, Spain has spent $774,000 to create each “green job,” including subsidies of more than $1.3 million for the wind industry. The study found that creating those jobs resulted in the destruction of nearly 113,000 jobs elsewhere in the economy.
“The price of a comprehensive energy rate, paid by the end consumer in Spain, would have to be increased 31 percent to begin to repay the historic debt generated by this rate deficit mainly produced by the subsidies to renewables,” according to the study.
But Eric Cefus, executive director of the Catamount Institute and creator of the Pikes Peak Sustainable Business Network, believes the numbers are wrong.
“They’re pulling those figures out of their you-know-what’s,” he said. “In fact, we know that every megawatt of green energy creates an additional $2 million in economic output. That’s jobs, money saved in conservation efforts, in being more efficient – it’s a broad-based look at the benefits.”
Cefus said that putting off the move to green energy will lead to more jobs being lost in the long run.
“If we don’t do this, the numbers are going to be much higher,” he said. “As fossil fuels become more and more difficult to find, and more and more expensive – the cost of doing business is going to go up, not down.”
Cefus cited another study – one that shows the world’s population could triple during the next 90 years – to 20.1 billion people.
“And if we’re fighting for resources today – and we are, where are we going to get the resources to support more people in the future?” he asked. “We have to make this move. And jobs might be lost in the short term, but we are taking a long-term view of this. Jobs will be gained, and businesses will become more efficient, saving money.”
Cefus also said that Colorado Springs has lost jobs because of the city’s reputation.
“Companies – big ones like Google, Johnson & Johnson, the list could go on – want to be sustainable,” he said. “They need to be more efficient, save money where they can. And many companies won’t expand here because we aren’t very sustainable. We just don’t have that reputation. So there are jobs lost right here because of lack of sustainability, lack of alternative energy.”
Industry insiders also argue that what’s true for Europe isn’t true for the United States.
Monique Hanis, spokeswoman for the Solar Industry Energies Association, said that 440,000 permanent jobs have been created in the U.S. as a result of expansion of the industry.
“This study has not been peer reviewed,” she said. “So I can’t comment on the veracity of it. But what we’ve seen is incredible – we’ve created 24.3 new jobs for every megawatt installed.”
A September 2008 study by independent consultant Navigant shows that jobs would be created if Congress extended the solar tax credits. Lawmakers agreed to extend the credits, investing $2.5 billion in the industry during the next 10 years.