There are too many economists. That, it seems, is the surest deduction one could make about a new Spanish study, which claims that for every renewable energy job financed by the government, approximately 2.2 traditional jobs are lost.
The key phrase is “financed by the government.” The study (PDF), written by Professor Gabriel Calzada Álvarez of Universidad Rey Juan Carlos, is essentially another salvo in an ideological war over opportunity costs, state subsidies and climate change. The argument, in a nutshell, is that when the government mandates that money be spent on a certain industry, such as wind turbines or solar panels, as is the case in Spain, it sucks away money from private enterprise, which, as the old saw goes, knows how to allocate resources the best.
The Spanish Renewables Bubble?
Snarkiness aside, Prof Alvarez does know something of which he speaks. Starting in the last decade, Spain embarked on a crash course in renewable energy, doubling wind and solar capacity several times with the help of generous state subsidies, and laws requiring electricity utilities to buy any available renewable energy – which ran up electricity costs for consumers 28.6 billion this decade, according to the study.
Furthermore, the result of the policies was a huge spike in solar panel installations – capacity grew over 20,000% between 2004 and 2008. As the Wall Street Journal points out, since a large number of the jobs created by these installations are temporary, the result is a jobs bubble, which pops once subsidies end.
Predictably, in the US, conservative opponents of the current climate change bill, and green initiatives in general, have picked up on the study, and used it as a blunt instrument in Congressional debates. In fact, since the study is basically a post-facto analysis of the Spanish experience, and has been rejected by the government there, its main purpose would seem to be to warn the US away from green energy policies – a suspicion buttressed by the fact that Professor Alvarez mentions Barack Obama and/or the US in each of the first seven paragraphs, and at least once per page thereafter.
Meanwhile, the Spanish Secretary of State for Climate Change mailed Representative Henry Waxman, a co-sponsor of Congress’ stalled climate bill, a letter outlining (PDF) the Spanish government’s irritated rebuttal of the study. Punto numero uno:
Climate Change, Remember?
Shockingly absent from Alvarez’s analysis is the reason all this (admittedly currently uncompetitive) clean power was installed to begin with: the world is getting warmer, and if we don’t do something about it, things could go very very wrong.
The Spanish government’s rejoinder also claims green job creation is much higher than the statistics Alvarez uses, and that “the analysis he makes uses a pretty low reliable[sic] and non rigorous methodology.” The government of Navarra, which invested in clean energy beginning in the 1980s, claims in its own analysis that renewable energy is one of the main reasons that region has had lower than average unemployment, both before the financial crisis and after it.
Of course, skeptics could argue that the government of Navarra has many selfish incentives to inflate the importance of green energy in job creation. The same could be said for Spain’s national government, which has poured vast resources into renewable energy.
The fact is, when it comes to economic cost/benefits of this or that subsidy, tax break or just that of doing nothing, there are a million economists available to slice the same information a million ways. Which is why, for the Spanish, and, we hope, the Americans, the number one reason for switching to renewable energy will remain foremost in any debate: saving the planet from ourselves.
(Thanks to Mother Jones for their article on the subject.)