Green Energy and Spain’s Bad Results

Barack Obama on Tuesday night expressed once again his admiration for the European model of “green” energy. He pledged incredibly large sums of your money to promote his vision of an energy economy based on renewable resources like solar and wind. A few days ago, I took a look at the French model of a nation heavily invested in nuclear technology with great results. The French made the decision to invest in nuclear for the same reasons Obama wants to go green, including national security.

But what about the other European countries that the anointed one so admires? Let’s take a look at some of them and see what Obama’s models have actually produced. I’ll start with Spain, since that’s the country that’s been in the news the most.

U.S. President Barack Obama’s 2010 budget proposal contains about $20 billion in tax incentives for clean-energy programs. In Spain, where wind turbines provided 11 percent of power demand last year, wind generators earn rates as much as 11 times more for renewable energy compared with burning fossil fuels. The premiums paid for solar, biomass, wave and wind power – – which are charged to consumers in their bills — translated into a $774,000 cost for each Spanish “green job” created since 2000, said Gabriel Calzada, an economics professor at the university and author of a study from King Juan Carlos University in Madrid.

For every new position that depends on energy price supports, at least 2.2 jobs in other industries will disappear, according to the study.

“The loss of jobs could be greater if you account for the amount of lost industry that moves out of the country due to higher energy prices,” he said in an interview. “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.”

For example, Spain’s Acerinox SA, the nation’s largest stainless-steel producer, blamed domestic energy costs for deciding to expand in South Africa and the U.S., according to the study.

Spain too easy? Let’s look at another of Obama’s favorites, Denmark. Obama has frequently cited Denmark as an example to be followed in the field of wind power generation, stating on several occasions that the Danes satisfy “20 percent of their electricity through wind power.” The truth is, as is almost always the case, a little different. In 2006 scarcely five percent of the nation’s electricity demand was met by wind. And over the past five years, the average is less than 10 percent — despite Denmark having carpeted its land with the machines. Government subsidy of wind producers over the past decade amounts to roughly $376 million per year. The public subsidy in Denmark per wind-related job created is 600,000-900,000 DKK per year ($90,000-$140,000 USD). This subsidy constitutes 175-250 percent of the average pay per worker in the Danish manufacturing industry. Thanks to a combination of expensive base power, taxes and additional charges, Danes pay more for their electricity than anyone in the European Union. Hardly the results Obama wants to publicize.

OK, maybe that’s too easy. Let’s look at a more industrialized nation; one more like America, Germany.

According to one study, “Germany’s experience with renewable energy promotion is often cited as a model to be replicated elsewhere, being based on a combination of far-reaching energy and environmental laws that stretch back nearly two decades.” Researchers add this: “German renewable energy policy … has failed to harness the market incentives needed to ensure a viable and cost-effective introduction of renewable energies into the country’s energy portfolio.” But since there is a lack of market incentives, what about government incentives?

Financial aid to Germany’s solar industry has now reached a level that far exceeds average wages, with per worker subsidies as high as $240,000. In 2008, the price mark-up attributable to the government’s support for “green” electricity was about 2.2 cents per kWh. For perspective, a 2.2 cent per kWh increase here in the US would amount to about a 20% increase in consumer’s electricity bills. Government support for solar energy between 2000 and 2010 is estimated to have a total net cost of $73.2 billion, and $28.1 billion for wind. A similar expenditure in the US would amount to about half a trillion dollars. Green jobs created by government actions disappear as soon as government support is terminated, a lesson the German government and the green companies it supports are beginning to learn. Government aid for wind power is now three times the cost of conventional electricity.

America still keeps a strategic supply of helium for use in blimps. It has maintained this strategic reserve for almost one hundred years. Keeping this reserve is a pointless, but harmless, exercise in backward thinking. Unfortunately, we cannot do this when the subject is oil. We cannot, as a nation, continue to plan our future based on petroleum technology. Obama is right about one thing, we need to explore alternatives to oil. Unfortunately, for us and for him, he looks to the wrong countries for examples.