Green Jobs: Field of Delusions

In the film and book “Field of Dreams” protagonist Ray Kinsella hears a voice that whispers, “If you build it, he will come.” This may work as justification for constructing a baseball diamond in the middle of an Iowa cornfield, but as an analogy upon which to base a whole new economy, it’s nothing more than fantasy. But such seems to be the case with the green jobs mantra — proponents pat each other on the back that renewable energy mandates will provide major environmental payoffs in terms of a sustainable future and more jobs. Putting aside the arguments against the promises of a sustainable future for another day, the claims for job creation are as fictitious as Shoeless Joe Jackson redeeming his legacy in Kinsella’s cornfield.

Last November, the Mackinac Center’s Russ Harding wrote that “Mandating more expensive forms of alternative energy takes money out of the pocket of consumers and drives up business costs, resulting in the loss of jobs.” Harding’s prescient analysis is supported by a March 2009 study released by Gabriel Calzada Alvarez, Ph.D., of the Universidad Rey Juan Carlos in Spain, which bluntly states: “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 principle justifications for U.S. ‘green jobs’ proposals. Yet an examination reveals these policies to be terribly economically counterproductive.”

Note that Alvarez doesn’t simply write counterproductive, but “terribly counterproductive” — a distinction roughly equal to the disparity between actors Wally Cox and perpetual baddie Jack Palance portraying Ty Cobb, perhaps baseball’s all-time most despicable superstar. The URJC study concludes that for every green energy job created, 2.2 “on average” will be lost, “or about nine jobs lost for every four created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.” Nine jobs lost for every four created is akin to the Mudville nine of “Casey at the Bat” fame.

The URJC study also found that the number of promised green jobs was exaggerated as only one out of 10 created was actually permanent. The remaining jobs were in construction, fabrication and installation, administration and projects engineering — at the cost of 110,000 jobs in other areas of Spain’s economy. The study concludes that every “green” megawatt created “destroyed 5.28 jobs on average elsewhere in the economy: 8.99 by photovoltaics, 4.27 by wind energy, 5.05 by mini-hydro.”

The nearly $36 billion spent on Spain’s renewable energy portfolio furthermore resulted in a market price of only $10 billion of energy created. In order to resolve the debt incurred by subsidies for this boondoggle, Spain would need to raise its comprehensive energy rate by 31 percent. Additionally, “the average annuity required payable to renewables is equivalent to 4.36 percent of all VAT collected, 3.45 percent of the household income tax, or 5.6 percent of the corporate income tax for 2007.”

The damage to Spanish businesses wrought by increased energy costs due to renewables mandates has also been severe. One company, Ferroatlantica, a producer of iron alloys, saw its percentage of energy as a total cost of production rise from 37 percent in 1997 to 43 percent in 2005. In 2006, Ferroatlantica moved its operations to France, stating: “Only internationally competitive energy prices will allow us to support such a basic industry, not only because it belongs to a strategic sector, but also to support employment and generate wealth.”  Other companies reported energy cost increases of nearly 55 percent.

Again showing his prescience, Harding wrote in November: “First we had the dotcom bubble and then the housing bubble. Is the green energy bubble next?” Indeed, the URJC study identifies the empty promises of solar, wind and mini-hydro as bubbles — depicting each as falling significantly short of promised goals; each costing far more than originally estimated, and each creating far fewer jobs than government dreamers predicted.

In terms of our current energy needs this Earth Day, it’s the World Series, the bases are loaded and we’re seemingly determined to bring minor leaguers to the plate and the mound. With apologies to Ernest Lawrence Thayer:

Oh, somewhere in this favored land the sun is shining bright;
But not enough to generate energy everywhere, nor with all the wind’s might.
The jobs promised all the workers also haven’t panned out.
There is no joy in Mudville — mighty renewables have struck out.

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Bruce Edward Walker is communications director for the Property Rights Network at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.