Wednesday, March 17, 2010

Green Jobs a Matter of Faith, Not Fact

Workers install solar panels on the roof of a Sam's Club store in Glendora, California. (David McNew/Getty Images)

There is a strong claim by politicians in a variety of countries that climate change policies and regulation, coupled with investments in green technologies, will create green jobs. Former U.S. Vice President Al Gore suggests that the right kind of strategy could create 1.7 million U.S. jobs. Michael Ignatieff, Canada’s Liberal leader, suggests that Canada could create, well a lot of green energy jobs with the right policies—cap and trade, investments in a smart-grid, non fossil fuel power policy, and carbon taxes. British Prime Minister Gordon Brown speaks of 400,000 green jobs in eight years.
These claims are based, in part at least, on the 2007 IPCC (Intergovernmental Panel on Climate Change) Fourth Assessment Report, especially Chapter 11, which looks at the economic costs and opportunities linked to climate change action. Unfortunately, this chapter did not go through the normal double review process the IPCC always says is the hallmark of its quality assurance process. Had it done so, some key problems may have been caught.
Little Peer Review

The first problem is that there are few peer-reviewed papers which support the position taken in the summary for Chapter 11 in the Summary for Policy Makers associated with the IPCC fourth assessment. One of the authors of several IPCC documents and one of the world’s top economists, Richard Tol, has suggested that the basis for many of the claims are from so-called “grey” literature—magazines, pamphlets and other documents—rather than peer-reviewed literature. Despite the IPCC’s claims that its processes focus only on peer-reviewed cases, it is now obvious from this and other chapters in the report that this is simply untrue.
The second problem is that a skeptical and thorough review would have revealed that the claims made for the economic impacts of carbon mitigation and other measures are based on computer models and simulations which are, in turn, based on the assumptions made by the modelers. One of the assumptions made is that policies on the environment will always be smart and well designed—something it is difficult to imagine coming out of the U.S. Senate. In fact, one peer-reviewed study of the EU policy to reduce CO2 emission by 20 per cent by 2020 states that it is poorly designed as a strategy and will cost more than twice the amount needed to achieve the outcome, with a resultant loss of jobs.
The third problem is that some of the caveats disappeared between the various drafts for Chapter 11. For example, a key assumption in some models is that revenues from carbon taxes and emission permit auctions will be used to reduce taxes on labor. However if, instead of using this revenue to reduce taxes it is used to invest in technology (which is what U.S. President Barack Obama plans), then jobs will be lost. Furthermore, there is no positive impact on employment and job creation if emission reductions are achieved by subsidies for renewables or if emission permits are given away for free, two actions commonplace amongst governments. Just look at Spain: According to a study released in 2009, for every “green job” created with government money over the last eight years 2.2 regular jobs were lost, and only 1 in 10 of the newly created green jobs became a permanent job.
Dr. Gabriel Calzada, an economics professor at Juan Carlos University in Madrid, wrote in his report, “Study of the Effects on Employment of Public Aid to Renewable Energy Sources” that the United States should expect similar results: “Spain’s experience (cited by President Obama as a model) reveals with high confidence, by two different methods, that the U. S. should expect a loss of at least 2.2 jobs on average, or about nine jobs lost for every four created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.” Read more.

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