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Europe’s current policy and strategy for supporting the so-called “green jobs” or
renewable energy dates back to 1997, and has become one of the principal
justifications for U.S. “green jobs” proposals. Yet an examination of Europe’s
experience reveals these policies to be terribly economically counterproductive.
This study is important for several reasons. First is that the Spanish experience is
considered a leading example to be followed by many policy advocates and politicians.
This study marks the very first time a critical analysis of the actual performance and
impact has been made. Most important, it demonstrates that the Spanish/EU-style
“green jobs” agenda now being promoted in the U.S. in fact destroys jobs, detailing this
in terms of jobs destroyed per job created and the net destruction per installed MW.
The study’s results demonstrate how such “green jobs” policy clearly hinders Spain’s
way out of the current economic crisis, even while U.S. politicians insist that rushing
into such a scheme will ease their own emergence from the turmoil.
The following are key points from the study:
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.
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, twothirds
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).
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 cuttingedge
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.
Originally posted by Doc Holiday
I read an article that states that BO's college term thesis, "which he set the curve" was about being the best 3rd world leader, and how to maintiain one?
Not sure if this matters, but it does bother me that the president accelled in running a 3rd world nation!
Why invest in cheap, plentiful energy when you can have expensive, job-costing energy?!?!?!?!
The Kyoto Protocol measures countries' production of carbon, not consumption. It's no accident the Europeans like Kyoto. It's a set of measures which, as they de-industrialize and production moves to countries like China, makes them look good. But the carbon consumption record of Europe, once you take those imports back, is pretty awful. That's why Kyoto looks like a success, and yet it hasn't caused even a blip in the emissions path.
What we have learnt is that politicians tend to choose the most expensive options first. Faced with climate change, what's our solution? In Europe, it's to devote most of our energies to a rapid build-out of wind power. This is the sort of thing that makes nuclear power look cheap. Climate change is about the massive increase of coal burning internationally, especially the growth of China and India fuelled by coal-based energy — and America too, where the Obama plans are also small relative to the problem.
What exactly will windmills across Europe do to address that overwhelmingly dominant effect? Of course they'll play some role, but it'll probably take a couple of weeks for China to add sufficient new coal power stations to cancel out any renewables effort in Britain. It's time to grow up. It's time to realize that coal is where the core of the problem lies, and to think cleverly about solutions towards that.
The problem we have in Europe is that people are obsessed by 2020, and that's a time period in which actually we can't do much on the technological front. By putting all our emphasis onto the technologies we can get in place by 2020, we're missing longer-term opportunities like nuclear power, and carbon capture and storage.
www.nature.com...
Originally posted by mikerussellus
reply to post by C0bzz
Sounds to me more of an engineering issue than a cost/ratio issue. But thanks for the information. I'm always up on learning more.
Mike
Originally posted by Doc Holiday
I read an article that states that BO's college term thesis, "which he set the curve" was about being the best 3rd world leader, and how to maintiain one?
Not sure if this matters, but it does bother me that the president accelled in running a 3rd world nation!