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“Green Jobs” In Germany

The “green jobs” hoax has been a fiasco wherever governments have tried to implement it. Most recently, the German think tank Rheinisch-Westfälisches Institut für Wirtschaftsforschung has published a report titled Economic impacts from the promotion of renewable energies: The German experience. The report is well worth reading in its entirety. It points out that the “green jobs” that have been created through government subsidies are more than offset by the inefficiency of the resulting energy production:

While employment projections in the renewable sector convey seemingly impressive prospects for gross job growth, they typically obscure the broader implications for economic welfare by omitting any accounting of off-setting impacts. These impacts include, but are not limited to, job losses from crowding out of cheaper forms of conventional energy generation, indirect impacts on upstream industries, additional job losses from the drain on economic activity precipitated by higher electricity prices, private consumers’ overall loss of purchasing power due to higher electricity prices, and diverting funds from other, possibly more beneficial investment.

I have often written that no government can create wealth by subsidizing the inefficient production of energy. The German think tank puts it in more official language:

Proponents of renewable energies often regard the requirement for more workers to produce a given amount of energy as a benefit, failing to recognize that this lowers the output potential of the economy and is hence counterproductive to net job creation. Significant research shows that initial employment benefits from renewable policies soon turn negative as additional costs are incurred.

The “green jobs” that have been produced in Germany are almost unbelievably expensive:

In the end, Germany’s PV [solar energy] promotion has become a subsidization regime that, on a per-worker basis, has reached a level that far exceeds average wages, with per-worker subsidies as high as 175,000 € (US $ 240,000).

The think tank also evaluated the claim that subsidizing “green jobs” is good because it leads to innovation:

Claims about technological innovation benefits of Germany’s first-actor status are unsupportable. In fact, the regime appears to be counterproductive in that respect, stifling innovation by encouraging producers to lock into existing technologies.

Because the “green jobs” produced by government subsidies are absurdly inefficient–as noted above, up to $240,000 per job!–the report says that should subsidies be ended, nearly all of them would quickly disappear. There is one hope, though–the United States might be dumb enough to take this inefficient energy production off the German government’s hands:

It is most likely that whatever jobs are created by renewable energy promotion would vanish as soon as government support is terminated, leaving only Germany’s export sector to benefit from the possible continuation of renewables support in other countries such as the US.

The Rheinisch-Westfälisches Institut für Wirtschaftsforschung’s conclusion is sobering:

Although Germany’s promotion of renewable energies is commonly portrayed in the media as setting a “shining example in providing a harvest for the world” (The Guardian 2007), we would instead regard the country’s experience as a cautionary tale of massively expensive environmental and energy policy that is devoid of economic and environmental benefits.

The facts, of course, won’t deter the Obama administration from making the subsidization of massively inefficient energy production a centerpiece of its economic policy. The effect will be to impoverish us all.

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