boom & bust cycles: the case of renewable energy in spain
TRANSCRIPT
Ángel Martín Oro
Instituto Juan de Mariana
Vilnius, 12 September 2013
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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Govt revenue in selected European countries (2001=100)
France Germany Greece Ireland Lithuania Portugal Spain
Context: Macro-level bubble:Government revenue
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100
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120
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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Govt revenue in selected European countries (2001=100)
France Germany Greece Ireland Portugal Spain
Macro-level bubble:Government revenue
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100
120
140
160
180
200
220
240
260
280
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Govt spending in selected European countries (2001=100)
France Germany Greece Ireland Portugal Spain
Macro-level bubble:Government spending
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Macro-level bubble:Fiscal balance & Unemployment
0
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10
15
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30
-12
-10
-8
-6
-4
-2
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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Un
em
plo
ym
en
t Ra
te (%
tota
l lab
or fo
rce)
Fis
cal
ba
lan
ce (
% o
f G
DP
)
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Boom & Bust cycles
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“Study of the effects on employment of public aid to renewableenergy sources” (March 2009). Calzada, G. et al. King JuanCarlos University.
Obama (2009):
“think of what‟s happening in countries like
Spain, Germany and Japan, where they are making real
investments in renewable energy. They are surging ahead
of us, poised to take the lead in these new industries.”
Renewable Energy: the Spanish model
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Renewables must be boosted with public resources
Perverse system in place (electricity tariff deficit)
Very generous premiums over RE established, with
attractive state-guaranteed returns
Huge boom in new installed capacity, out of control
causing the system‟s costs (tariff deficit) skyrocket
Need to correct unsustainable imbalances causes
the bust
Renewables boom & bust
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Evolution & structure of installedcapacity of the Special Regime (MW)
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A subsidy-led boom
Subsidies to solar energyrose from €190m in 2007 to€3.5 billion in 2012 (an 18-fold increase). Total subsidies to all renewablesreached €8.1 billion in 2012
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Evolution of the tariff deficit(accumulated about 30bn €)
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Solar boom went bust
“Mr X is the victim of a bungled, overambitious renewablesprogramme. Governments everywherewant to turn green and createenvironmentally friendly jobs. But as Spain shows, good intentions are notenough. If the policies are wrong, thebenefits are wasted, the jobsdisappear, the costs remain -and business investors bear the brunt.” (TheEconomist)
28 JUL 201311
What about green jobs?
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Green jobs: myth or reality?
European Commission‟s White Paper „Energy for the
future: renewable sources of energy‟ (1997): it is quite
clear that a pro-active move towards such energy sources
will lead to significant new employment opportunities.
At what cost? Throwing vast amounts of public money…
Main result of the study (2009): 2.2 jobs destroyed for
every “green job” created
“The solar-energy business has lost tens of thousands of
jobs from its peak.” (The Economist, 2013)13
Higher debt (tariff deficit)
Higher energy prices
Lower competitiveness, delocalization & deindustrialization
Regulatory uncertainty
Less investment in the sector
Net job losses
Capital missallocation
Consequences of this misguidedgreen jobs policy
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Europe vs. The US
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In a nutshell
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Ángel Martín Oro
TW @a_martinoro // [email protected]
Instituto Juan de Mariana
Main reference:
“Study of the effects on employment of public aid to renewableenergy sources” (March 2009). Calzada, G. et al. King Juan Carlos
University.
Thank you