Spain's energy gamble on alternatives

Washington Post:

As world leaders converge in Pittsburgh for a major economic summit this week, one of the biggest questions they face is this: How do you begin to replace the millions of jobs destroyed by the Great Recession, now that the worst of the crisis has potentially passed?

Here on the sun-drenched and windy Iberian Peninsula, Spain thinks it has an answer: create new jobs and save the Earth at the same time.

Green jobs have become a mantra for many governments, including that of the United States. But few nations are better positioned -- or motivated -- to fuse the fight against recession and global warming than Spain. The country is already a leader in renewable fuels through $30 billion in public support and has been cited by the Obama administration as a model for the creation of a green economy. Spain generates about 24.5 percent of its electricity through renewable sources, compared with about 7 percent in the United States.

But with unemployment at 18.5 percent, the government here is preparing to take a dramatic next step. Through a combination of new laws and public and private investment, officials estimate that they can generate a million new green jobs over the next decade. The plan would increase domestic demand for alternative energy by having the government help pay the bill -- but also by compelling millions of Spaniards to go green, whether they like it or not.

In the long term, the government envisions a new army of engineers and technicians nurturing windmills and solar farms amid the orange orchards and carnation fields of Andalusia and Galicia. In the short term, officials say the renewable-energy projects and refurbishing of buildings and homes for energy efficiency could redeploy up to 80 percent of the million construction workers here who lost their jobs in 2008.

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Though the Spanish government estimates that the alternative-energy sector generates about 200,000 jobs here, about double the number in 2000, critics contend they have cost taxpayers too much money.

In some instances, the government's good intentions have distorted the energy market.

Take, for example, the recent Spanish solar bubble.

Though wind power remains the dominant alternative energy here, the government introduced even more generous inducements in recent years to help develop photovoltaic solar power -- a technology that uses sun-heated cells to generate energy. Lured by the promise of vast new subsidies, energy companies erected the silvery silicone panels in record numbers. As a result, government subsides to the sector jumped from $321 million in 2007 to $1.6 billion in 2008.

When the government moved to curb excess production and scale back subsidies late last year, the solar bubble burst, sending panel prices dropping and sparking the loss of thousands of jobs, at least temporarily.

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A new $300 million thermo-solar plant in the arid mining town of Puertollano, about 100 miles south of Madrid in the Don Quixote country of Castile-La Mancha, offers a glimpse into Spanish hopes. The partnership between the large corporate utility Iberdrola and a national energy agency employed as many 650 workers to build the plant over the past two years. The huge plant was like manna from heaven for a host of companies stung by the recession. A maker of car mirrors retrofitted its assembly lines to produce the plant's massive reflective panels, for example.

But Calzada's recent study -- which has come under fire by green advocates here and abroad -- suggests that the government's cost to create one job in leading alternative-energy sectors has averaged $855,000. It notes that although hundreds may be temporarily employed to build plants, a far smaller number gain permanent positions.

Because alternative-energy plants are more expensive than traditional power plants that burn fossil fuels, the government here has made green generation profitable by promising big subsidies for years to come. Though most Spaniards have so far seen only modest increases in their electricity bills, even government officials are warning that prices might suddenly jump in the coming years as more of the real costs are passed on to consumers.

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Those are very expensive jobs that are not sustainable, and the energy they produce is much more expensive than more traditional forms. If green jobs were the ticket to prosperity then Spain would not be suffering from such a high unemployment rate. If the Obama administration thinks this is the way to deal with the energy problem we will be in much worse shape economically in the coming years.