The Germans went into wind power harder and faster than anyone else – and the cost of doing so is catching up with a vengeance. The subsidies have been colossal, the impacts on the electricity market chaotic and – contrary to the purpose of the policy – CO2 emissions are rising fast (seeour post here).
Some 800,000 German homes have been disconnected from the grid – victims of what is euphemistically called “fuel poverty”. In response, Germans have picked up their axes and have headed to their forests in order to improve their sense of energy security – although foresters apparently take the view that this self-help measure is nothing more than blatant timber theft (see our post here).
One justification put up by the wind industry for the social and economic chaos caused by spiralling power costs was the claim that investment in wind power would create a “new” economy with millions of groovy “green” jobs.
True it was that Germany saw an increase in renewables related employment – the bulk of it in the development and manufacture of solar panels – but all of it was built on a raft of taxpayer and power consumer subsidies: it was – therefore – unsustainable.
Any job that relies on a subsidy results in a loss of employment elsewhere in the economy. In Germany, the subsidies for “green” jobs are paid for in rocketing power prices, which impacts on the profitability and competitiveness of all businesses and industries. German manufacturers – and other energy intensive industries – faced with escalating power bills are set to pack up and head to the USA – where power prices are 1/3 of Germany’s (see our posts here and here and here).
In the result, Germany faces a decline in industrial output and, therefore, declining employment.
And now that the Germans have started to wind back subsidies for renewables (see our post here), the “green” jobs that were built on them are disappearing fast. Here’s Die Welt on the unsustainable “green” jobs “miracle”.
Germany’s Green Jobs Miracle Collapses
28 May 2014
Renewable energy was supposed to create tens of thousands of green jobs. Yet despite three-digit Euro billions of subsidies, the number of jobs is falling rapidly. Seven out of ten jobs will only remain as long as the subsidies keep flowing.
The subsidization of renewable energy has not led to a significant, sustainable increase in jobs. According to recent figures from the German Government, the gross employment in renewable energy decreased by around seven per cent to 363,100 in 2013.
Counting the employees in government agencies and academic institution too, renewable energy creates work for about 370,000 people.
This means, however, that only to about 0.86 percent of the nearly 42 million workers, which are employed in Germany, work in the highly subsidized sector of renewable energy. Much of this employment is limited to the maintenance and operation of existing facilities.
Further job cuts expected
In the core of the industry, the production of renewable energy systems, only 230,800 people were employed last year: a drop of 13 percent within one year, which is primarily due to the collapse of the German solar industry.
There is no improvement in sight, according to the recent report by the Federal Government. It says: “Overall, a further decline of employees will probably be observed in the renewable energies sector this and next year.”
15 years after the start of green energy subsidies through the Renewable Energy Sources Act (EEG), the vast majority of jobs from in this sector are still dependent on subsidies.
Hardly any self-supporting jobs in Green energy
According to official figures from the Federal Government, 70% of gross employment was due to the EEG last year. Although this is a slight decrease compared to 2012, seven out of ten jobs in the eco-energy sector are still subsidized by the Renewable Energy Sources Act (EEG).
Around 137,800 employees work in the wind sector which was the only eco-energy sector, besides geothermal, that increased employment. About 56,000 employees in photovoltaic sector depend on EEG payments.
Investments drop by 20 percent
Subsidies for the generation of green electricity have been paid for almost 15 years and have piled up into a three-digit billion sum, which has to be paid over 20 years by electricity consumers through their electricity bills. This year alone, consumers must subsidize the production of green electricity to the tune of around 20 billion Euros. A lasting effect on the labour market is not obvious.
The report, “Gross employment in renewable energy sources in Germany in 2013”, commissioned by the Federal Ministry of Economy and Energy, was jointly written by the institutes DLR, DIW, STW, GWS and Prognos. According to the researchers, the cause of the decrease in employment is the declining investments in green energy systems.
The investments in renewable energy sources in Germany fell by a fifth, to 16.09 billion Euros in the past year. Only about half as many solar panels were installed in Germany as the year before. Investment in biomass plants and solar thermal dropped as well.
“Nothing left from the job miracle”
The researchers do not expect that the production of high quality green energy systems will still lead to a job boom in Germany. For this year and the next they expect a further decline in employment instead. Thereafter, low-tech sectors such as “operation and maintenance” as well as the supply of biomass fuels are expected to “stabilise the employment effect”.
“A few years ago the renewable sector was the job miracle in Germany, now nothing is left of all of that,” said the deputy leader of the Greens in the Bundestag, Oliver Krischer.
The Green politician is sceptical about the attempts by the Federal Government to reduce the subsidy dependence of the green energy sector: “The brakes on the expansion of renewables by the previous conservative-liberal government is now fully hitting the job market,” said Krischer: “Thanks to the current EEG reform by the Union and SPD, the innovative and young renewables industry will lose more jobs.”
The bottom line, no jobs remain
The report by the Federal Government explicitly estimates only the “gross employment” created primarily by green subsidies. The same subsidies, however, have led to rising costs and job losses in many other areas, such as heavy industry and commerce as well as conventional power plant operators. For a net analysis, the number of jobs that have been prevented or destroyed as a result would have to be deducted from the gross number of green jobs.
Official figures for the net effect of renewables on employment in Germany were originally supposed to be presented in July, according to the Federal Economics Ministry. However, the presentation has now been delayed until the autumn.
Researchers such as the president of the Munich-based IFO institute, Hans-Werner Sinn, believe that the net effect of subsidies for renewable energy on the labour market is equal to zero: “Whoever claims that net jobs have been created must prove that the capital intensity of production in the new sectors is smaller than in the old ones. There are no indications for that.”
“There is no positive net effect on employment by the EEG,” said Sinn: “Through subsidies for inefficient technologies not a single new job has been created, but wealth has been destroyed.”
Translation Philip Mueller
The handful of permanent jobs (as well as fleeting construction work) created in Australia’s wind industry were all the product the mandatory Renewable Energy Target and the Renewable Energy Certificates (RECs) issued to wind power generators under it. The REC is a Federal Tax on all Australian power consumers paid as a direct subsidy to wind power outfits.
So far, the REC Tax has cost Australian power consumers around $8 billion and – if the RET remains – will add a further $50 billion to power bills over the next 17 years (see our post here).
It’s the cost impact on power prices of that massive subsidy stream that has energy intensive industries – like aluminium processing and mining – lining up to ensure that the mandatory RET gets scrapped now (see our posts here and here). If the RET is retained, expect to see more industrial outfits close their doors, killing off real jobs in the thousands (see our posts here and here).
But don’t expect Tony Abbott to sit back and allow a policy built on a “green” fantasy to destroy Australia’s economic future (see our post here). As the Head Boy puts it:
[T]he renewable energy target is very significantly driving up power prices. Increasing power prices obviously pose a serious threat, not just to domestic budgets, but also to the competitiveness of industries, particularly energy-intensive industries.
I think we should be the affordable energy capital of the world, not the unaffordable capital of the world, and that’s why the carbon tax must go and that’s why we’re reviewing the renewable energy target.
I don’t want to lose perfectly good industries that employ thousands of people and which value-add for our country …
… The review is taking place now … let’s wait and see what the review comes up with. But all of us should want to see lower power prices and, plainly at the moment, the renewable energy target is a very significant impact on higher power prices.
As the Germans are learning fast, any policy that is unsustainable will, eventually, fail or compel its creators to scrap it. The mandatory RET is no exception.