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Spain’s Energy Model: What Not To Do

When President Obama unveiled his cap-and-trade energy tax in January, he referenced the government-aided renewable energy policies of Spain as a model.  The Spanish plan aimed for renewable energy to saturate 12% of the energy market and 20% of the electric production by 2010.  Now, as cap-and-tax makes its way through Congress and nears reality for American consumers, we come to discover the less-than-rosy side to Spain’s policies.  Not only did the visions of so-called green-collar jobs not materialize, but the policies meant to create the green jobs have had a negative impact on the jobs already available for Spain’s working class.

After years of promoting green jobs, Spain has the highest unemployment rate of any developed country—currently at 17.5%, and that number is expected to climb to 20.5% by the end of the year.  That’s one in five workers out of a job.

According to a study by Dr. Gabriel Calzada, an economics professor at Juan Carlos University in Madrid, on the effect of public aid to renewable energy sources on employment, if the U.S. adopts the Spanish model as proposed by President Obama, for each job created, the “U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created.”

Dr. Calzada further found that the high-energy costs associated with these policies have driven high-energy reliant businesses, like manufacturing, to cheaper places.  And of the green jobs created, two-thirds were temporary installment and construction jobs.

Other countries have similar job-loss stories to share.  As the economic realities of Australia’s much-heralded cap-and-trade policies began to sink in, Prime Minister Kevin Rudd announced a delay in its implementation.  A headline in The Australian says it all:  “Carbon Plan Will Cause Jobs Carnage.”

Closer to home, another study conducted by Penn State University, found that replacing two-thirds of U.S. coal-based energy with renewables would cost three to four million American jobs.  In my home state of Minnesota, sixty-two percent of energy comes from coal.  With taxpayers struggling to pay for the higher costs for energy and consumer goods that result from these policies, individuals who rely on coal-based energy for their pay checks will experience a double jeopardy.

The legislation under consideration in the House of Representatives seems to acknowledge the devastating loss of jobs, particularly within the manufacturing sector, in a section entitled, “Climate Change Worker Adjustment Assistance.”  It provides public assistance to individuals who lose their jobs because of cap-and-tax and specifically notes an expectation that those in manufacturing will be hard hit.

Congress committed $1.1 trillion of the taxpayers’ money to create and/or save jobs in the so-called “stimulus” bill.  Yet, the papers are filled with headlines about how those funds for the most part haven’t yet made their way to Main Street employment, getting caught up in the red tape of the federal pipeline.  In fact, Earl Devaney, who was appointed by the President to oversee the “stimulus” funds distribution, recently noted that federal agencies are still drawing up the guidelines and taking in applications for many of the more than 100 separate spending streams even now, three months after passage of the bill.

Even government employees – in one of the few sectors actually stimulated by the so-called “stimulus” package – are finding their jobs in jeopardy.  The $135 billion in the package to plug state budget holes is amongst the money that actually has been distributed, yet states across the country are laying off thousands of state employees.

The Congressional Budget Office (CBO) just announced that it expects U.S. unemployment to continue to rise and top 10%.  And, in making that announcement, CBO Director Douglas Elmendorf noted that amongst the factors that could temper the strength of an economic recover were “the loss of household wealth…and low utilization of manufacturing capacity.”

We have the evidence that cap-and-tax will both reduce household wealth and kill manufacturing.  To go forward with this energy tax will destroy our hopes for economic recovery.  American workers are already hurting and cap-and-tax will only turn up the pain.

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