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The Pain in Spain



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Spain (unemployment rate: 18.5 percent and climbing) is willing to do anything to address the problem of joblessness — except, of course, cut taxes or weaken organized labor’s stranglehold on the economy. So naturally, the country’s socialist leaders have turned to the snake oil of “green jobs.” How’s that working out?

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.

“What they’re talking about now — creating a new sustainable economic model through alternative energy — is going to be exactly the opposite of sustainable,” said Gabriel Calzada, a Spanish economist and critic of the government’s alternative-energy policy. “You’re only going to create more distortion, more bubbles. It isn’t going to work.”

We hear echoes of our own government’s policies: the bursting of the ethanol bubble, the runaway costs of “Cash for Clunkers,” the fraud and waste inherent in federal “weatherization” programs. And no wonder: Spain “has been cited by the Obama administration as a model for the creation of a green economy.” Here’s just one thing we can look forward to as we follow Spain’s example:

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.

Paying twice — through higher taxes and higher energy bills — for questionable environmental benefits. That’s our brave green future.



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