BY ROBERT L. BRADLEY JR. – Despite record federal deficits, the Obama administration is pouring millions of taxpayer dollars into “green” jobs initiatives. In Arizona, three state agencies just announced they’re using $3 million in federal grant money to train locals for jobs at renewable-energy companies. North Carolina is spending $1 million in federal dollars to run an analysis of the labor market to determine demand for green jobs in coming years.
Policymakers at all levels of government should pause. Washington should rescind such grants and the recipients should return the booty — these jobs are “bubble” jobs, and as such, they’re bad jobs.
Back in 2010, for example, President Obama visited the California-based solar power company Solyndra to tout the plant’s new jobs. Just months after his visit, Solyndra shut down its plant – having yet to turn a profit – and laid off 175 workers. Congress is now investigating the $535 million loan guarantee the company received as part of the 2009 stimulus.
The president should have taken Solyndra’s bust as a sign that “green” jobs are shaky ground on which to build America’s 21st-century economy. Instead, the administration is continuing to shower money on the clean energy sector in the mistaken belief that government can pick winners and losers better than the market.
In total, the 2012 budget contains $8 billion in subsidies, government grants, and tax breaks for clean energy technologies, which the administration claims will create millions of new jobs. The logic seems straightforward: More wind turbines and solar panels mean more jobs for builders, technicians, and engineers.
Unfortunately, there’s a big problem at the center of this agenda. Simply put, staking job creation on industries that depend on government favor for survival is not a long-term solution to our economic troubles.
To be sustainable, jobs – and the industries that create them – need to be based on actual consumer demand. Green jobs are created not by the market, but by subsidies and by mandate. Obama acknowledged as much in his State of the Union speech when he declared: “By 2035, 80 percent of America’s electricity will come from clean energy sources.” In other words, the government will create a market by requiring Americans to buy more expensive electricity from clean energy sources.
Currently, oil and natural gas supply 63 percent of our total energy needs, while renewables – wind, solar, hydropower, and ethanol – supply less than 10 percent. As a study by University of Illinois researchers bluntly puts it,: “Turning off the electricity generated from coal and other non-renewable sources…would mean that most Americans would literally freeze in the dark.”
The president now includes nuclear power, “clean” coal, and (peculiarly) natural gas among his politically favored “clean” energy sources. While the inclusion of fossil fuels and nuclear power makes Obama’s electricity mandate somewhat more realistic, it also makes the economic rationale for lavishing government handouts upon renewables appear all the more flimsy.
Renewables already receive over twice the level of subsidies compared with conventional energy sources. Yet, as evidenced by Solyndra, they still can’t compete with cheaper energy supplies like natural gas. And who could expect them to when their production costs are more than six times those of other producers?
The Obama administration’s answer is to hobble the more competitive industries with huge new tax burdens. Thus, the 2012 budget contains nearly $90 billion in tax increases on the oil and natural gas industry. Of course, it’s ultimately consumers who will pay those taxes.
Consumers will also be paying higher energy prices as renewables drive up costs. The net drain on the economy will no doubt hurt job growth in other sectors, meaning that green job spending could end up a wash or worse. Spain’s experience with green job spending suggests that “worse” is the far likelier outcome. According to a report by Spanish economists, the country lost 2.2 jobs for every job “created” in the “green” economy.
Nor will green jobs necessarily last long. Budget priorities shift as political parties move in and out of power and as new challenges arise. Just consider the deep cuts made to community service block grants in Obama’s 2012 budget. Once a domestic-policy darling of our Community-Organizer-in-Chief, community service grants have been pushed aside for other policy priorities – like clean energy.
If the administration wants to get serious about job creation, it should look to the industries that don’t need taxpayer money to stay afloat. Moreover, by promoting affordable energy supplies, it could bring down costs in all sectors of the economy – enabling the private sector to create real and sustainable jobs. With the unemployment rate at nearly 10 percent, this shouldn’t be a hard choice to make.
Robert L. Bradley Jr. is the CEO & Founder of the Institute for Energy Research and author, most recently, of Capitalism at Work: Business, Goverrnment, and Energy.