Saturday, March 13, 2010

Only Thing Green About Renewable Energy Subsidies Is Dollars

I've been skeptical about solar power in general, and especially about claims by the Administration and lefties that Spain's experience shows that solar subsidies create "green jobs". (Carbon cuts further reduce employment, as California's Legislative Analyst's Office recently confirmed.)

Don't trust NOfP, or Planet Gore? Well would you prefer the March 9th New York Times?:
Half the solar power installed globally in 2008 was installed in Spain. . . [A]s low-quality, poorly designed solar plants sprang up on Spain’s plateaus, Spanish officials came to realize that they would have to subsidize many of them indefinitely, and that the industry they had created might never produce efficient green energy on its own.

In September the government abruptly changed course, cutting payments and capping solar construction. [The] brief boom turned bust. Factories and stores shut, thousands of workers lost jobs, foreign companies and banks abandoned contracts that had already been negotiated.

[The] wrenching fall points to the delicate policy calculations needed to stimulate nascent solar industries and create green jobs, and might serve as a cautionary tale for the United States, where a similar exercise is now under way. . .

In 2008 the nation connected 2.5 gigawatts of solar power into its grid, more than quintupling its previous capacity and making it second to Germany, the world leader. But many of the hastily opened plants offered no hope of being cost-competitive with conventional power, being poorly designed or located where sunshine was inadequate, for example. . .

In its haste to create a solar industry, Spain made some miscalculations: solar plants can be set up so quickly and easily that the rush into the industry was much faster than anticipated. And the lavish subsidies inflated Spanish solar installation costs at a time when they were rapidly decreasing elsewhere -- in part because of increasing competition from panel makers in China, but also because higher volumes produced economies of scale.
See also The Atlantic's Megan McArdle:
[G]reen jobs have become the ginseng of progressive politics: a sort of broad-spectrum snake oil that cures whatever happens to ail you. They are the antidote to economic malaise, an underskilled labor force, the inherent unwillingness of the public to suffer any significant economic and personal dislocation in order to save the environment. They enhance nationalistic vigor. (If we don't act now, the Chinese will steal all of our green jobs!) They stave off aging of stale political platforms. And I'm pretty sure they're good for bunions, too.

Obviously it is true that if we subsidize various environmental activities, this will create jobs for some people. Unfortunately, it will also destroy jobs for other people--people who make the things that would otherwise have been purchased with tax dollars. They may partially offset the economic losses of switching off a very efficient, cheap, high density energy source. They will also, hopefully, give us cleaner, cooler air to breathe. But they do not represent a net improvement in either GDP or the unemployment rate. They represent a loss.

But they're green! And green is such a pretty color. Also, everyone loves frogs. So who could possibly be against my green jobs except some cranky libertarian?
At best, subsidies might destroy twice as many jobs as they create. At worst--well, remember what happened in Italy.

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