Spain suspends solar subsidy
Jun 18, 2010
Andrew Orlowski reports http://www.theregister.co.uk/2010/06/17/spain_sustainability_scam/ that the Spanish government is reining back hard on the payments it makes to solar power companies - who are in essence subsidy farmers.
Spanish economist Professor Gabriel Calzada, at the University of Madrid estimated that each green job had cost the country $774,000.
Worse, a "green" job costs 2.2 jobs that might otherwise have been created - a figure Calzada derived by dividing the average subsidy per worker by the average productivity per worker. Industry, which can't afford to pay the higher fuel bills, simply moves elsewhere.
You can download the Calzada paper here http://www.juandemariana.org/pdf/090327-employment-public-aid-renewable.pdf
Here is the Executive Summary:
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 data1, 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.
12. The total over-cost – the amount paid over the cost that would result from
buying the electricity generated by the renewable power plants at the market
price - that has been incurred from 2000 to 2008 (adjusting by 4% and
calculating its net present value [NPV] in 2008), amounts to 7,918.54 million
Euros (appx. $10 billion USD)
13. The total subsidy spent and committed (NPV adjusted by 4%) to these three
renewable sources amounts to 28,671 million euros ($36 billion USD).
14. The price of a comprehensive electricity rate (paid by the end consumer) in
Spain would have to be increased 31% to being able to repay the historic debt
generated by this rate deficit mainly produced by the subsidies to renewables,
according to Spain’s energy regulator.
15. Spanish citizens must therefore cope with either an increase of electricity rates
or increased taxes (and public deficit), as will the U.S. if it follows Spain’s model.
16. The high cost of electricity due to the green job policy tends to drive the
relatively most electricity-intensive companies and industries away, seeking
areas where costs are lower. The example of Acerinox is just such a case.
17. The study offers a caution against a certain form of green energy mandate.
Minimum guaranteed prices generate surpluses that are difficult to manage. In
Spain’s case, the minimum electricity prices for renewable-generated electricity,
far above market prices, wasted a vast amount of capital that could have been
otherwise economically allocated in other sectors. Arbitrary, state-established
price systems inherent in “green energy” schemes leave the subsidized
renewable industry hanging by a very weak thread and, it appears, doomed to
dramatic adjustments that will include massive unemployment, loss of capital,
dismantlement of productive facilities and perpetuation of inefficient ones.
18. These schemes create serious “bubble” potential, as Spain is now discovering.
The most paradigmatic bubble case can be found in the photovoltaic industry.
Even with subsidy schemes leaving the mean sale price of electricity generated
from solar photovoltaic power 7 times higher than the mean price of the pool,
solar failed even to reach 1% of Spain’s total electricity production in 2008.
19. The energy future has been jeopardized by the current state of wind or
photovoltaic technology (more expensive and less efficient than conventional
energy sources). These policies will leave Spain saddled with and further
artificially perpetuating obsolete fixed assets, far less productive than cutting-
edge technologies, the soaring rates for which soon-to-be obsolete assets the
government has committed to maintain at high levels during their lifetime.
20. The regulator should consider whether citizens and companies need expensive
and inefficient energy – a factor of production usable in virtually every human
project- or affordable energy to help overcome the economic crisis instead.
21. The Spanish system also jeopardizes conventional electricity facilities, which are
the first to deal with the electricity tariff deficit that the State owes them.
22. Renewable technologies remained the beneficiaries of new credit while others
began to struggle, though this was solely due to subsidies, mandates and related
programs. As soon as subsequent programmatic changes take effect which
became necessary due to “unsustainable” solar growth its credit will also cease.
23. This proves that the only way for the “renewables” sector - which was never
feasible by itself on the basis of consumer demand - to be “countercyclical” in
crisis periods is also via government subsidies. These schemes create a bubble, which is boosted as soon as investors find in “renewables” one of the few
profitable sectors while when fleeing other investments. Yet it is axiomatic, as
we are seeing now, that when crisis arises, the Government cannot afford this
growing subsidy cost either, and finally must penalize the artificial renewable
industries which then face collapse.
24. Renewables consume enormous taxpayer resources. In Spain, 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.
.......
The author of a damning study about the failure of Spain’s “green jobs” program — a story broken at PJMhttp://pajamasmedia.com/blog/breaking-gr....ed- bomb-parts/ — received the threatening package on Tuesday from solar energy company Thermotechnic.
June 24, 2010 - by Christopher Horner
Spain’s Dr. Gabriel Calzada — the author of a damning study concluding that Spain’s “green jobs” energy program has been a catastrophic economic failure — was mailed a dismantled bomb on Tuesday by solar energy company Thermotechnic.
Says Calzada:
Before opening it, I called [Thermotechnic] to know what was inside … they answered, it was their answer to my energy pieces.
The bomb threat is just the latest intimidation Dr. Calzada has faced since releasing his report and following up with articles in Expansion (a Spanish paper similar to the Financial Times). A minister from Spain’s Socialist government called the rector of King Juan Carlos University — Dr. Calzada’s employer — seeking Calzada’s ouster. Calzada was not fired, but he was stripped of half of his classes at the university. The school then dropped its accreditation of a summer university program with which Calzada’s think tank — Instituto Juan de Mariana — was associated.
Additionally, the head of Spain’s renewable energy association and the head of its communist trade union wrote opinion pieces in top Spanish newspapers accusing Calzada of being “unpatriotic” — they did not charge him with being incorrect, but of undermining Spain by daring to write the report.
Their reasoning? If the skepticism that Calzada’s revelations prompted were to prevail in the U.S., Spanish industry would face collapse should U.S. subsidies and mandates dry up.
June 24, 2010 - by Christopher Horner
Spain’s Dr. Gabriel Calzada — the author of a damning study concluding that Spain’s “green jobs” energy program has been a catastrophic economic failure — was mailed a dismantled bomb on Tuesday by solar energy company Thermotechnic.
Says Calzada:
Before opening it, I called [Thermotechnic] to know what was inside … they answered, it was their answer to my energy pieces.
The bomb threat is just the latest intimidation Dr. Calzada has faced since releasing his report and following up with articles in Expansion (a Spanish paper similar to the Financial Times). A minister from Spain’s Socialist government called the rector of King Juan Carlos University — Dr. Calzada’s employer — seeking Calzada’s ouster. Calzada was not fired, but he was stripped of half of his classes at the university. The school then dropped its accreditation of a summer university program with which Calzada’s think tank — Instituto Juan de Mariana — was associated.
Additionally, the head of Spain’s renewable energy association and the head of its communist trade union wrote opinion pieces in top Spanish newspapers accusing Calzada of being “unpatriotic” — they did not charge him with being incorrect, but of undermining Spain by daring to write the report.
Their reasoning? If the skepticism that Calzada’s revelations prompted were to prevail in the U.S., Spanish industry would face collapse should U.S. subsidies and mandates dry up.
......
First the PNAS blacklist of sceptics and now a bomb threat? Are warmists are getting desperate in the face of contradictory evidence and changing public opinion?
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