As planning permissions to plaster even more of the English countryside with wind turbines are rushed through, it may be time to point out that wind turbines achieve
little, except profits for the manufacturers and a ready supply of dead birds;
still the false promise of millions of ‘green’ jobs is rolled out in an attempt
to stifle debate or opposition.
It has been stated that Britain needs
cheap renewable energy, but that, in the form of nuclear power, is already available.Wind farms have provided the dearest energy in
the EU for the Danes whose taxpayers funded the wind farms; and the surplus
energy, which is bought by their neighbours at low-cost, are the real beneficiaries.
In March 2009, the Spanish University of Juan Carlos published a report, ‘Study on the
effects on employment of public aid to renewable energy sources.’
The report revealed Spain’s Green Policies had driven it to the
brink of bankruptcy, and left them with the highest employment rate in Europe.
The report was squashed but
then leaked and you can read it for yourselves following this link:
1. As President Obama correctly remarked, Spain provides
a reference for the establishment of government aid to renewable energy. No
other country has given such broad support to the construction and production
of electricity through renewable sources. 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. The question
that this paper answers is “at what price?”
2. Optimistically treating European
Commission partially funded data1, we find that for every renewable energy job
that the State manages to finance, Spain’s experience cited by President Obama
as a model 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 9 jobs lost
for every 4 created, to which we have to add those jobs that non-subsidized
investments with the same resources would have created.
1 The MITRE project was partially funded
by DG TREN (Energy & Transport) of the European Commission under the
Altener programme.
Study about the effects on employment of
public aid to renewable
energy sources
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3. Therefore, while it is not possible to
directly translate Spain’s experience with exactitude to claim that the U.S.
would lose at least 6.6 million to 11 million jobs, as a direct consequence
were it to actually create 3 to 5 million “green jobs” as promised (in addition
to the jobs lost due to the opportunity cost of private capital employed in
renewable energy), the study clearly reveals the tendency that the U.S. should
expect such an outcome.
4. At minimum, therefore, the study’s
evaluation of the Spanish model cited as one for the U.S. to replicate in quick pursuit
of “green jobs” serves a note of caution, that the reality is far from what has
typically been presented, and that such schemes also offer considerable
employment consequences and implications for emerging from the economic crisis.
5. Despite its hyper-aggressive (expensive
and extensive) “green jobs” policies it appears that Spain likely has created a
surprisingly low number of jobs, two thirds of which came in construction,
fabrication and installation, one quarter in administrative positions,
marketing and projects engineering, and just one out of ten jobs has been
created at the more permanent level of actual operation and maintenance of the
renewable sources of electricity.
6. This came at great financial cost as
well as cost in terms of jobs destroyed elsewhere in the economy.
7. The study calculates that since 2000 Spain spent €571,138
to create each “green job”, including subsidies of more than €1 million per
wind industry job.
8. The study calculates that the programs
creating those jobs also resulted in the destruction of nearly 110,500 jobs
elsewhere in the economy, or 2.2 jobs destroyed for every “green job” created.
9. Principally, the high cost of
electricity affects costs of production and
employment levels in metallurgy,
non-metallic mining and food processing, beverage and tobacco industries.
10. Each “green” megawatt installed
destroys 5.28 jobs on average elsewhere in the economy: 8.99 by photovoltaics,
4.27 by wind energy, 5.05 by mini-hydro.
11. These costs do not appear to be unique
to Spain’s
approach but instead are largely inherent in schemes to promote renewable
energy sources.
12. The total over-cost – the amount paid
over the cost that would result from buying the electricity generated by the
renewable power plants at the market price - that has been incurred from 2000
to 2008 (adjusting by 4% and calculating its net present value [NPV] in 2008),
amounts to 7,918.54 million Euros (appx. $10 billion USD)
13. The total subsidy spent and committed
(NPV adjusted by 4%) to these three renewable sources amounts to 28,671 million
euros ($36 billion USD).
Executive
Summary: Lessons from the Spanish renewables bubble
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14. The price of a comprehensive
electricity rate (paid by the end consumer) in Spain would have to be increased
31% to being able to repay the historic debt generated by this rate deficit
mainly produced by the subsidies to renewables, according to Spain’s energy
regulator.
15. Spanish citizens must therefore cope
with either an increase of electricity rates or increased taxes (and public
deficit), as will the U.S.
if it follows Spain’s
model.
16. The high cost of electricity due to
the green job policy tends to drive the relatively most electricity-intensive
companies and industries away, seeking areas where costs are lower. The example
of Acerinox is just such a case.
17. The study offers a caution against a
certain form of green energy mandate.Minimum
guaranteed prices generate surpluses that are difficult to manage. In Spain’s case,
the minimum electricity prices for renewable-generated electricity, far above
market prices, wasted a vast amount of capital that could have been otherwise
economically allocated in other sectors. Arbitrary, state-established price
systems inherent in “green energy” schemes leave the subsidized renewable
industry hanging by a very weak thread and, it appears, doomed to dramatic
adjustments that will include massive unemployment, loss of capital, dismantlement
of productive facilities and perpetuation of inefficient ones.
18. These schemes create serious “bubble”
potential, as Spain
is now discovering.The most
paradigmatic bubble case can be found in the photovoltaic industry.
Even with subsidy schemes leaving the mean
sale price of electricity generated from solar photovoltaic power 7 times
higher than the mean price of the pool, solar failed even to reach 1% of Spain’s total
electricity production in 2008.
19. The energy future has been jeopardized
by the current state of wind or
photovoltaic technology (more expensive
and less efficient than conventional energy sources). These policies will leave
Spain
saddled with and further artificially perpetuating obsolete fixed assets, far
less productive than cutting-edge technologies, the soaring rates for which
soon-to-be obsolete assets the government has committed to maintain at high
levels during their lifetime.
20. The regulator should consider whether
citizens and companies need expensive and inefficient energy – a factor of
production usable in virtually every human project- or affordable energy to
help overcome the economic crisis instead.
21. The Spanish system also jeopardizes
conventional electricity facilities, which are the first to deal with the
electricity tariff deficit that the State owes them.
22. Renewable technologies remained the
beneficiaries of new credit while others began to struggle, though this was
solely due to subsidies, mandates and related programs. As soon as subsequent
programmatic changes take effect which became necessary due to “unsustainable”
solar growth its credit will also cease.
23. This proves that the only way for the “renewables”
sector - which was never feasible by itself on the basis of consumer demand -
to be “countercyclical” in crisis periods is also via government subsidies.
These schemes create a bubble, which is boosted as soon as investors find in “renewables”
one of the few profitable sectors while when fleeing other investments. Yet it
is axiomatic, as we are seeing now, that when crisis arises, the Government
cannot afford this growing subsidy cost either, and finally must penalize the
artificial renewable industries which then face collapse.
24. Renewables consume enormous taxpayer
resources. In Spain, the average annuity payable to renewables is equivalent to
4.35% of all VAT collected, 3.45% of the household income tax, or 5.6% of the
corporate income tax for 2007.
