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Report: EU energy policies predicted to destroy jobs

Green economic policies mean more pain than gain for Britain, according to a new Civitas report

The Green Mirage, by John Constable, finds claims that the low-carbon economy can deliver so-called ‘green collar’ jobs are staggeringly far-fetched and unsupported by official measures. The Government claims that green policies can both reduce carbon emissions and provide new jobs. For example, David Cameron has argued for offshore wind farms, saying: “It’s a triple win. It will help secure our energy supplies, protect our planet and the Carbon Trust says it could create 70,000 jobs

But Constable examines the empirical evidence from existing green policies, as well as the European Commission’s future projections. Both suggest that the economic benefits to Europe as a whole will be marginal at best, and non-existent for Britain.

The report examines the results of a series of economic models developed for the EU Commission, EmployRES (2009). Their research predicts that the EU-27’s ambitious climate policies will have only ‘slight’ net positive benefits in terms of GDP and employment in 2020. This outcome is dependent on the assumption that Europe remains dominant in the world export markets for low-carbon technologies. But the experience of competition between the German and Chinese solar industries does not support this view.

This ‘slight’ positive outcome is not evenly spread across the EU. Spain is the biggest winner on most of the Commission’s optimistic export scenarios. Spain gains an estimated 120,000 net jobs via current green policies, and over 150,000 if green subsidies are accelerated. But Britain loses 10,000 jobs with current green policies and 30,000 jobs if those policies are accelerated. In other words, the more green technologies are subsidised by the EU, the greater the predicted net loss for British workers.

Evidence from the UK so far strengthens these concerns. In the period 2002-2010 the UK spent £5 billion subsidising dedicated renewable electricity generators, at a cost of £230,000 per wind industry worker over that period. Subsidy per wind industry worker in the year 2009/10 amounted to £54,000, which is greatly in excess of the median earnings in either the public (£29,000) or the private sectors (£25,000). While it is not yet possible to estimate the net employment impacts of such costs, they seem unlikely to be positive.

Continuing to subsidise renewables will impose high costs on the rest of the economy. This will result in net job losses and loss of international competitiveness. A subsidised artificial market for low-carbon industries will provide premature reward for unready technologies, and actively discourage further invention. But it is precisely this innovation that is essential for a real low-carbon transition in the longer term. Current green policies waste resources now that could be better spent on improving low-carbon technologies for the future.

Constable concludes that, far from re-energising Britain’s economy, the ‘green economy’ will drain investment from other sectors, making Britons pay more for electricity indefinitely and live less productive lives with access to fewer jobs. Even if successfully implemented, the current low-carbon agenda would require that the energy sector takes up a much larger share of the overall economy than is currently the case. Since this sector is almost entirely dependent on state mandates for its income and operation, it would in effect enjoy a state-approved monopoly, with the rents being shared with the labour force at the expense of the rest of the economy, where there would be net job losses.

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