1. Vilnius, 12 September 2013
Ángel Martín Oro
Instituto Juan de Mariana

2. Context: Macro-level bubble:
Government revenue

Govt revenue in selected European countries (2001=100)
260
240
220
200
180
160
140
120
100
2001
2002
France
2003
Germany
2004
2005
Greece
2006
2007
Ireland
2008
2009
Lithuania
2010
Portugal
2011
2012
Spain
1

3. Macro-level bubble:
Government revenue

Govt revenue in selected European countries (2001=100)
180
170
160
150
140
130
120
110
100
2001
2002
France
2003
2004
Germany
2005
2006
Greece
2007
2008
Ireland
2009
2010
Portugal
2011
2012
Spain
2

4. Macro-level bubble:
Government spending

Govt spending in selected European countries (2001=100)
280
260
240
220
200
180
160
140
120
100
2001
2002
France
2003
2004
Germany
2005
2006
Greece
2007
2008
Ireland
2009
2010
Portugal
2011
2012
Spain
3

5. Macro-level bubble:
Fiscal balance & Unemployment

4
30
Fiscal balance (% of GDP)
25
0
-2
-4
-6
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
20
15
10
-8
-10
-12
5
0
Unemployment Rate (% total labor force)
2
4

6. Boom & Bust cycles

5

7. Renewable Energy:
the Spanish model

“Study of the effects on employment of public aid to renewable
energy sources” (March 2009). Calzada, G. et al. King Juan
Carlos 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.”
6

8. Renewables boom & bust

 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
7

9. Evolution & structure of installed
capacity of the Special Regime (MW)


8

10. A subsidy-led boom

Subsidies to solar energy
rose from €190m in 2007 to
€3.5 billion in 2012 (an 18fold increase). Total
subsidies to all renewables
reached €8.1 billion in 2012
9

11. Evolution of the tariff deficit
(accumulated about 30bn €)

10

12. Solar boom went bust

“Mr X is the victim of a
bungled, overambitious renewables
programme. Governments everywhere
want to turn green and create
environmentally friendly jobs. But as
Spain shows, good intentions are not
enough. If the policies are wrong, the
benefits are wasted, the jobs
disappear, the costs remain -and
business investors bear the brunt.” (The
Economist)
28 JUL 2013
11

13. What about green jobs?

12

14. 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

15. Consequences of this misguided
green jobs policy

 Higher debt (tariff deficit)
 Higher energy prices
 Lower competitiveness, delocalization &
deindustrialization
 Regulatory uncertainty
 Less investment in the sector
 Net job losses
 Capital missallocation
14

16. Europe vs. The US

15

17. In a nutshell

16

18. Thank you

Ángel Martín Oro
TW @a_martinoro // amartin@juandemariana.org
Instituto Juan de Mariana
Main reference:
“Study of the effects on employment of public aid to renewable
energy sources” (March 2009). Calzada, G. et al. King Juan Carlos
University.