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On Green Energy: Plainly Not Helping Spain

Tuesday, May 3, 2011

For Spaniards, renewable energy has gotten old.

I recently studied the question of whether or not the whole “green energy leads to green jobs” paradigm has any merit to it, by studying how things have worked out in Europe, where it has been tested extensively. In this article, I focus on Spain (I’ve previously covered Germany, the Netherlands, and the United Kingdom).

Spain has long been considered a leader in the drive to renewable power. Indeed, President Obama singled Spain out as an example. In a 2009 speech, the president said, “And so we have enormous commercial ties between our two countries and we pledged to work diligently to strengthen them, particularly around key issues like renewable energy and transportation, where Spain has been a worldwide leader and the United States I think has enormous potential to move forward.”

Since 2000 Spain has spent €571,138 to create each ‘green job,’ including subsidies of more than €1 million per wind industry job.

But the story of Spain’s renewable energy and green job leadership took a series of hits shortly after the president’s speech. In March 2009, researchers Gabriel Calzada Alvarez and colleagues at the Universidad Rey Juan Carlos released a study in which they examined the economic and employment impacts of Spain’s aggressive push into renewables. What they found confounds the usual green job rhetoric:

• The study calculates that since 2000 Spain has spent €571,138 to create each “green job,” including subsidies of more than €1 million per wind industry job.

• 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.

• Principally, the high cost of electricity affects costs of production and employment levels in metallurgy, non-metallic mining, food-processing, beverage, and tobacco industries.

• 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.

• These costs do not appear to be unique to Spain’s approach but instead are largely inherent in schemes to promote renewable energy sources.

Spain has also found its foray into renewable energy unsustainable. As Bloomberg BusinessWeek reports, Spain has slashed subsidies for new solar power plants. Analyst Andrew McKillop observes in The Energy Tribune:

In Spain, where subsidies to the country's massive windfarms and their dependent industries is estimated to have attained as much as 12 billion Euros in 2009, either directly or through "feed-in tariff" subsidy for power sales, government proposals target at least a 30% cut in subsidies. Major wind energy producer firms, such as Gamesa, have begun cutting their workforces, while trying to find sales outside Europe, helped by a weaker Euro. In addition and due to Spain's highly exposed deficit finance status, making it a target for market speculators betting its bond rates must rise, the Spanish government is also likely to cut financial backing to existing renewable energy power plants, built with an expectation of guaranteed prices and government subsidies for 25 years.

And then there is the matter of corruption. As Bloomberg reports:

An audit of solar-power generation from November 2009 to January 2010 found that some panel operators were paid for doing the “impossible”—producing electricity from sunlight during the night, El Mundo reported today, citing a letter from Secretary of State for Energy Pedro Marin.

Further, it appears that solar power producers “may have run diesel-burning generators and sold the output as solar power, which earns several times more than electricity from fossil fuels.” Nineteen people have been arrested in Spain’s “clean energy” sector on charges ranging from bribery, to unsavory land deals, to issuing licenses to friends and family, and simple construction fraud. The Guardian adds, “When Spain's National Commission for Energy decided to inspect 30 solar gardens, it found only 13 of them had been built properly and were actually dumping electricity into the network.”

Politicians around the world are peddling the green dream, that by forcing green energy into our electrical generation, we will create green jobs to produce green technology, and we’ll have a utopian future of clean, inexpensive electricity. Reality, however, shows that efforts to centrally plan our energy economy and to pick winning and losing technologies is an endeavor fraught with difficulty.

Kenneth P. Green is a resident scholar at the American Enterprise Institute.

FURTHER READING: Previous entries in this series are “Don’t Envy Germany,” “Renewable Energy Fails to Green the U.K. Economy,” and “A Dutch (Re)Treat.” Green discusses “President Obama's Flawed Energy Blueprint,” “The Green Jobs Myth,” and “Empowering the Free Energy Markets.”

Image by Darren Wamboldt/Bergman Group.

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