The Green Subsidy Job Loss Nexus

The Green Subsidy-Job Loss Nexus

There comes a point when even how to save the planet boils down to hard economics – what can we afford? Bottom line: the green refrain “whatever it costs” won’t do in the real world. Whichever side of the Atlantic we live on, the economic indicators are all registering in the red ‘critical’ zone when it comes to the destructive impact of diverting precious economic resources into green subsidies, particularly on real jobs.

It was all predicted to be so different. A new, if almost wholly subsidized, green industry was supposed to create hundreds of thousands of new, lasting jobs. They created some. But alas, a wealth of evidence has emerged revealing how “green” jobs are largely created at the expense of real jobs, or only exist so long as the umbilical cord of public subsidy isn’t cut, or both.

Nowhere is this so blatant as in the energy-associated sector, the engine room of Western civilization and all modern society. So you might wonder why it is that the greatest impediment to economic revival is the gullibly “green” bull-headedness of many leading politicians – left and right of the ideological divide – and their complete lack of ability to grasp ‘sound money’ economics and realistic energy policies.

Obamanomics: Job buster-in-chief

Given the conveyor-belt of White House spin you might actually believe that the Obama administration was in the ‘job creation’ – or, at least, the ‘aiding job creation’ – business. As such you might put your hard-earned income on Obama’s latest hair-brained schemes, including a new ‘Department of Jobs’. Back on Planet Reality, however, a whole bunch of studies and indicators reveal plainly that government patently isn’t in the job creation business. In fact, the government penchant for creating “green jobs” ultimately reveals it is actually in the job-destruction business.

If you wanted clear evidence of just how many real energy sector jobs are being blocked by President Obama, the EPA and other federal and state bureaucracies, consider the recent report Progress Denied: A Study on the Potential Economic Impact of Permitting Challenges Facing Energy Projects published by the U.S. Chamber of Commerce. According to the study, Obamanomics (my term, not theirs) right now has its foot on the throat of prospective energy sector job growth, to the tune of millions of new, real jobs.

According to the detailed study, if allowed to flourish, an “investment phase” for planning and construction for new energy projects – that’s real hydrocarbon energy projects, not the pathetic renewable kind – including offshore drilling, would generate $577 billion in direct investment and generate a $1.1 trillion increase in U.S. GDP, including $352 in employment earnings. The report estimates that would create up to 2 million new energy sector jobs during each year of the construction phase.

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Next up, the “operations phase” would likely generate $99 billion in direct annual output, yielding a further $145 billion in GDP and $35 billion in employment earnings. Taken together, that would create an average of 791,200 jobs per year of operation. In total, assuming 20 years of new energy sector construction and operation if off-limits drilling et al was allowed, that would add approximately $3.4 trillion in GDP, including $1.4 trillion in employment earnings, and an additional one million+ more jobs per year.

And what can be seen in macrocosm can also be seen in microcosm.

On the eve of ‘Earth Day’ 2010, Seattle Mayor Mike McGinn and U.S. VP Joe Biden announced, amid much fanfare, a new green job creating scheme via a $20 million federal grant to invest in “weatherization”. That’s insulating roofs, attic spaces etc. It was claimed the scheme would create around 2,000 jobs and retro-fit 2,000 homes in poorer neighborhoods. Over a year into the program just three homes have been retro-fitted and 14 jobs – mostly administrative – created. Biden’s “triple win” of boosting the economy, reducing consumer bills and lowering gas emissions turns out instead to be a “triple whammy” – for federal taxpayers, that is. The problem is that the Seattle experience of finding Green jobs come at a ludicrously high cost per job, much as it has wherever the dead hand of Obamanomics has utilized TARP funds to promote green jobs.

But then, it isn’t just Obamanomics that sponsors the green subsidy-job loss nexus.

Euronomics

In early August the UK manufacturers’ association, the EEF, said that green taxes and climate change policies had reached a “tipping point” where they are hitting jobs and investment and economically “crippling the recovery”. Among the litany of green climate levies that are cited as biting by the EEF: fuel duties, air passenger levies, levies on waste, landfill, the carbon reduction commitment and the government’s move to increase tax on North Sea oil and gas.

According to a separate hard-hitting report The Green Mirage published by the UK think-tank Civitas and written by the director of the Renewable Energy Foundation (REF), the government’s plans to boost renewable energy projects will actually destroy up to 30,000 British jobs. Describing the UK Government’s green policies as “staggeringly far-fetched”, the director of the REF warned that green subsidies would put people on the dole as well as lead to higher energy prices. The report went on to point out that the government’s lb5 billion subsidy for renewable electricity generators in the eight years to 2010 was “the equivalent of paying every worker in the wind industry lb230,000. In effect, every wind industry job was subsidized to the tune of lb54,000 in 2010.

And for what benefit? The report goes on to quote European Commission models which suggest the EU’s climate policies generally will have only “slight” benefits for GDP and employment by 2020, ‘benefits’ that, for all the world-leading UK domestic investment in renewables, will not be felt by the UK at all.

In June 2010, a spokesman for the European Metals Association, speaking to European Energy Review, warned that the EU’s “inward-looking unilateral climate policy” would put European producers of non-ferrous metals out of business stating: “What we are seeing is a slow process of delayed or cancelled investments, and even factories closing. This could spell the end of aluminium and other non-ferrous metals in the EU”. And all this at the very time that global demand for metals is increasing.

The evidence for how green jobs literally ‘feed off’ real jobs – diverting resources from real into phoney jobs, has been well-documented. Not least in its disastrous effect on the Spanish economy; an economy currently approaching the same dire straits already tossing Greece, Portugal and Ireland around like corks. The fact is that simple economics reveals a clear nexus between regimes of green subsidies that create a green jobs mirage, and the mass disappearance of, or delay in creating, real jobs.

It was precisely this point that Chevron’s VP for Global Exploration, Bobby Ryan, was making on Fox News in mid-August as Big Oil, for once, came out ‘swinging’ on Obama’s offshore drilling moratorium. Ryan pointed out that the energy sector already employs 9.2 million Americans. In an example of masterly understatement, given the figures we saw above, Ryan pointed out, “It could employ a lot more”. Showing a map of the off-limits continental shelf, Ryan made the case that 2.8 trillion barrels of oil equivalent awaits tapping off the U.S. coastline. Extraction of that alone, not to mention onshore shale gas, would require a whole lot of extra manpower.

The green subsidy industry is not even close to having any impact on still rising global carbon emissions. It further hampers struggling national economies with no discernible benefit. And it threatens national electricity generation and thus future prosperity. It does, however, make bundles of cash for central government, some of which ends up recycled as yet more job-busting green subsidies.

If political “greens” could, for once, put the best interests of their country first taking their ideological foot off the throat of potentially explosive real energy sector growth, the markets could yet be primed to strike an energy-led economic ‘gusher’.

© 2013 Energy Tribune

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