Subsidising Wind Power: A Sure-Fire Job Killer

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As the wind industry gravy train shudders to a halt in Australia, the wind industry and its parasites are working overtime to garner support for retention of the completely unsustainable 41,000 GWh mandatory Renewable Energy Target.

One of the “pitches” being made is that winding back the RET will cost tens of thousands of jobs. Never mind that the wind industry has generated only a handful of permanent jobs in Australia; that the bulk of the jobs created were in fleeting construction work; and that new wind farm construction has more or less ground to a halt: “investment” in the construction of wind farms went from $2.69 billion in 2013 to a piddling $40 million this year (see this article).

When the “wind industry creates jobs” mantra is being chanted, what the Clean Energy Council doesn’t say is that every single job it’s “created” depends entirely on the mandatory RET and the Renewable Energy Certificates issued to wind power outfits under it.

The REC operates as a Federal Tax on all Australian power consumers – that is paid as a direct subsidy to wind power generators. The REC Tax/Subsidy has already cost power consumers over $8 billion and – if the current RET remains – will add a further $50 billion to power bills over the next 17 years (see our post here).

A subsidy paid to “create” a job in one part of an economy, means that a job (or jobs) will be lost elsewhere. A study by UK Versa Economics found that for every job created in the wind industry 3.7 jobs are lost elsewhere in the UK economy (see our post here).

One Australian study has forecast that the current mandatory RET will kill over 6,000 jobs (see our post here).

The idea of wind industry job “creation” is like robbing Peter to pay Paul, except that the thief has to filch $4 from Peter to end up handing $1 to Paul.

The Germans have worked out that their dream of “creating” thousands of sustainable “green” jobs was just that: a dream. The hundreds of €billions spent subsidising wind and solar have killed the German’s international competiveness, with major companies heading to the USA – where power costs are a third of Germany’s (see our post here). And, as renewables subsidies are inevitably wound back, the jobs they “created” are disappearing fast (see our post here).

The renewables subsidy story in Spain is no different. The Spaniards have thrown 100s of billions of euros in subsidies at solar and wind power, and have achieved nothing but economic punishment in return. The much touted promise of thousands of so-called “green” jobs never materialized. No surprises there. Instead, the insane cost of subsidising wind and solar power has killed productive industries, with the general unemployment rate rocketing from 8% to 26% – youth unemployment is nearer to 50% in many regions (see our post here). For an update on the Spanish renewables disaster see the study produced by the Institute for Energy Research available here.

A study undertaken by Gabriel Calzada Álvarez (PhD) of the University of Rey Juan Carlos back in 2009 – “Study of the effects on employment of public aid to renewable energy sources” (available here) summed up the adverse employment impacts of the Spanish renewables disaster as follows:

EXECUTIVE SUMMARY: LESSONS FROM THE SPANISH RENEWABLES BUBBLE

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 data, 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, two-thirds 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.

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Gabriel Calzada Álvarez (PhD)
University of Rey Juan Carlos

Well, that couldn’t be much clearer.

In Spain, just as here, the great bulk of employment in the wind industry involves fleeting construction work (once the turbines are up, there’s nought to do) – as noted in point 5 – of the jobs created:

“two-thirds 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”.

That the Spaniards had to stump up “subsidies of more than €1 million” to create each wind industry job; that each wind industry job thus created, killed off 2.2 jobs elsewhere in the economy; and that each MW of wind power capacity installed destroyed 4.27 jobs – is nothing short of an economic disaster.

Faced with an unemployment calamity, the Spanish government has moved to dramatically slash the subsidies to renewables: tearing up wind farm contracts; retrospectively stopping subsidies for wind farms built before 2005; reducing the insanely high rates paid for wind power (previously guaranteed for 20 years) – capping the (subsidised) profits wind power outfits can make at 7.4%, above which the outfit must sell at the (unsubsidised) market rate (see our post here).

Given the results of Spain’s disastrous wind power experiment, the Australian wind industry’s “fan-tastic” claims about an employment Eldorado at the end of the RET rainbow are little more than fool’s gold.