Saturday, November 5, 2011

Gary Palmer: The Green Economy: Costly and economically damaging

  The federal government’s considerable efforts to create a “green” economy are losing big money. To make it worse, data from other nations that have tried to create a green economy indicates that more job losses are coming. The news of bankruptcy filings by U.S. green energy companies that received hundreds of millions of dollars in taxpayer-funded loans just adds to the frustration with the Obama Administration over the poor economy and high unemployment.

  Solyndra, one of President Obama’s model green companies and the largest recipient of taxpayer-provided largesse at $535 million, was supposed to manufacture solar panels.  However, the collapse of solar energy markets in Germany and Spain, along with the fact that China produces solar panels at much lower costs, doomed the company. That’s right … over half a billion of taxpayer dollars went right into the green money pit.

  As The New York Times recently reminded readers, the Obama Administration promised the creation of five million green jobs within ten years. Even though the federal government has poured hundreds of millions of dollars into the effort to create green jobs, few jobs have been created and those have come at very high costs.

  For instance, the federal government provided $186 million from the Obama stimulus plan to weatherize homes in California. According to The New York Times “…California has spent only a little over half that sum and has so far created the equivalent of just 538 full-time jobs in the last quarter.

  The New York Times also reported that another $59 million in state, federal and private money was spent on green jobs training that resulted in only 719 job placements at a cost of $82,000 for each one.

  An August Investor’s Business Daily editorial reported that Johnson Controls, a Michigan-based company, received $300 million in conservative grants and produced only 150 jobs. That figures out to $2 million per job.

  The failure of the green economy is not limited to the United States. A report released in March by Verson Economics entitled, “Worth the Candle? The Economic Impact of Renewable Energy Policy in Scotland and the UK” examined the costs and benefits of government policy to support the renewable energy industry in Scotland and the United Kingdom (UK).

  The report found that although the British government spent £330 million (British pounds) annually to support the renewable energy effort, 3.7 jobs are lost for every job created in renewable energy. The study also found that costs of the renewable energy effort were passed to electricity consumers who paid over £1 billion in 2009 – 2010 in higher electricity bills. The report concluded that “… policy to promote the renewable electricity sector in both Scotland and the UK is economically damaging.” In other words, not only did British taxpayers subsidize this job-killing scheme, they also paid for it a second time through higher utility bills.

  A study entitled “The Myth of Green Jobs” by Gordon Hughes, Professor of Economics at Edinburgh University in Scotland, projected that British government policies promoting renewable energy will increase inflation in the British economy and reduce British gross domestic product (GDP) by two to three percent for at least a decade. Prof. Hughes found that the costs for renewable energy will be 9 to 10 times higher than conventional energy sources.

  According to Prof. Hughes, the bottom line is: “Not only is there no evidence to support lobbyists’ and government ministers’ claims that green ‘investment’ will create green jobs, but also such a policy will result in lower real disposable incomes and higher prices.”

  Other studies find the effort to convert to clean energy production through wind and solar have proven hazardous to the health of the economies in other European countries such as Germany, Denmark and Spain. In fact, another study found that for every Spanish government-subsidized green job created, 2.2 jobs were lost in the rest of the economy. Christopher Booker of the British tabloid, The Daily Mail, calls the government effort to push green energy the “the greatest scam of our age.”

  The failure to create a successful green economy in the UK and other European Union nations despite massive government subsidies is well-documented and raises serious questions about the Obama Administration using billions of taxpayer dollars in an attempt to create green jobs in the U.S.

  It is becoming evident that the green economy is at least for now, a pipe dream. Other U.S. green companies, many of whom received huge taxpayer-fund subsidies and loans, will surely follow Solyndra into bankruptcy or closure. As the failure of the green economic efforts in the UK and other European Union nations have shown, the idea of creating millions of green jobs has thus far proven to be a very costly and economically damaging myth.

  About the author: Gary Parlmer is president of the Alabama Policy Institute, a non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.

  This article was published by the Alabama Policy Institute.

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