Lessons from the Spanish Renewables Bubble

This study, sub-titled "Lessons from the Spanish Renewables Bubble" is a first critical look into the actual economic outcomes of broad government support of so-called green jobs.

While "green jobs," or "green collar jobs" are promoted as a means of lifting the country out of economic doldrums and the Spanish example has been promoted by the Obama administration as a "reference for the establishment of government aid to renewable energy," this research suggests that the Spanish -- and broader European -- support of this policy has proven "to be terribly economically counerproductive."

Study findings indicate,

• For every green job that the state finances, there are "at least 2.2 jobs ... lost." Overall, Spain lost nearly 113,000 jobs while creating their green jobs. Those jobs were lost mainly in "metallurgy, non-metallic mining, and food processing ..."
• Despite a vigorous support of the green jobs policy, Spain has actually created "a surprisingly low number of jobs." Additionally, the majority (two-thirds) of the jobs created came in short-term construction, fabrication, and installation positions. A further one quarter came in administrative and marketing. Only one in ten of the jobs created were permanent positions in operation and maintenance.
• Spain spent €571,138 for each green job created, including subsidies of more than €1 million per wind industry job.
• Each" 'green' megawatt installed destroys 5.28 jobs elsewhere in the economy. 8.99 by photovoltaics, 4.27 by wind energy, 5.05 by mini-hydro."
• These costs are "inherent in schemes to promote renewable energy sources."
• Comprehensive energy rates would need to be increased by 31% to repay the debt generated by subsidies to renewable energy.
• The only way for the renewables sector to be "countercyclical" in the current economic crisis is through the provision of government subsidies. Once those subsidies are removed, the industry finds itself in a classic "bubble" condition and facing collapse.
• The renewable sector in Spain consumes "enormous taxpayer resources. 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."

Interestingly, this Universidad Rey Juan Carlos study mirrors the findings of the University of Illinois Law & Economics Research Paper (No. LE09-001), titled "Green Jobs Myths." The "Green Jobs Myths" study abstract indicates that,

• No standard definition of a green job exists.
• Green jobs estimates include huge numbers of clerical, bureaucratic, and administrative positions that do not produce goods and services for consumption.
• The green jobs studies made estimates using poor economic models based on dubious assumptions.
• By promoting more jobs instead of more productivity, the green jobs described in the literature encourage low-paying jobs in less desirable conditions.
• Companies react more swiftly and efficiently to the demands of their customers and markets, than to cumbersome government mandates.
• Some technologies preferred by the green jobs studies are not capable of efficiently reaching the scale necessary to meet today's demands and could be counterproductive to environmental quality.