From the TUC

Don’t trust me, I’m an economist?

12 Jan 2010, by in Environment

Please forgive this delayed reaction to a PM news item last Friday 8 January. It could have come straight from the climate change deniers’ brigade. I’ve had to check my facts. Presenter Eddie Mair reported that 70,000 new jobs would be created following the Government’s announcement of nine new offshore windfarms, requiring 6,000 massive wind turbines.

“70,000 jobs? A tricky one”, Eddie told us. He then asked Tim Harford, aka the Undercover economist, and presenter on BBC TV of “Trust Me, I’m an Economist” to comment.

It’s fair enough for Tim to question the source of the jobs estimate (a study for the Carbon Trust). But every commentator knows full well that the number of green energy jobs actually created in the UK depends crucially on where the turbines are made. The TUC has  always argued for the rapid growth of a domestic wind turbine industry. High ambition equals high job numbers.

But then Tim seems to have lost his compass, citing a “Spanish study” to suggests that investing a billion euros would “destroy 2,000 jobs”, because of “all the taxes on businesses and higher electricity bills”. No it wouldn’t, Tim.

Go to the websites. You’ll see that the study is rubbish. First, it’s not a Spanish study, but a study of Spain’s renewable energy industry by a US research institute, using deeply flawed analysis. It was widely criticised aim at the time of publication, March 2009, was to undermine President Obama’s drive to create clean energy jobs. I mean, just look at the “Spanish study’s” headline findings and you get suspicious:

  • The  “green jobs” agenda now being promoted in the U.S. in fact destroys jobs.
  • The  results demonstrate how “green jobs” policy clearly hinders Spain’s way out of the economic crisis.
  • Those programs resulted in the destruction of 113,000 jobs elsewhere in the economy.
  • The U.S. can expect 2.2 jobs to be destroyed for every 1 renewable job financed by the government.
  • Only 1 in 10 of the jobs actually created through green investment is permanent.

An analysis by the US National Renewable Energy Laboratory found, “fundamental and technical limitations of the analysis conducted by King Juan Carlos University”, with critical shortcomings in assumptions implicit in the conclusions.

ISTAS, the Spanish labour organisation, was fuming. I know, because we were working together at the UN climate change conference in Bonn when the study was published. Using official labour statistics, ISTAS researchers found that 189,000 jobs were created in Spain’s renewable industry (33,000 in wind), with 99,000 indirect jobs. Renewables reduced the nation’s energy dependency. Energy prices in Spain were below the EU average.

One bad call doesn’t make you a bad economist, Tim, but your listeners are entitled to a public correction.

3 Responses to Don’t trust me, I’m an economist?

  1. Cityunslicker
    Jan 12th 2010, 11:02 pm

    But green promotion requires subsidies, which come from taxes, which hinder companies, which lowers productivity.

    So indirectly Green jobs produced through increasing susbisidies will destory jobs. Certainly there are studies that show this in germany. Perhaps this is a price worth paying to reduce carbon footprints.

    The main issue though is that UK Green eneergy policy is a bif fail. Wind is a useless solution that could cause an energy crisis.

    Just look at its performance in recent days –

  2. Adam Lent

    Adam Lent
    Jan 13th 2010, 10:28 am

    If that were really the case then countries with higher levels of tax and a more interventionist industrial policy would have lower levels of productivity. But that isn’t the reality: France and Germany, for example, have long outperformed the UK on productivity while the US (with relatively low tax) has also got a better record on productivity than the UK.

    Tax is actually a very poor predictor of productivity performance for good reasons. For example, if a Government invests large sums of taxpayers’ money in developing new technologies which it can then provide cheaply to its domestic industries, the chances of increased productivity are improved. It doesn’t always work like that but it could and has on a number of occasions.

  3. Cityunslicker
    Jan 15th 2010, 6:02 pm

    No it does not. You are linking the wrong pieces.

    taxing people’s energy bills is not an industrial policy becuase the money is not invested in green jobs. its aim is just to push up the price of carbon based fuels.

    The money is then spent on ineffective windfarms.

    Everyone loses and there are less jobs all round because the energy bills have to be paid instead of wages.

    Industrial policy would be investing in and R&D to try and make wind farms more efficient by creating say, large scale electrical storage.

    But socialists are not going to get the detail, raise taxes and all will be well.