Planet Gore contributor Iain Murray in the pages of the Washington Examiner on Sunday, offering the “Lessons from Europe” here and excerpted below.
The European Union has had a cap-and-trade scheme for greenhouse gas emissions in place for several years now, but has failed to make much dent in emissions. This is important to America, because a cap-and-trade scheme is President Obama’s preferred policy vehicle for delivering emissions reductions. Yet the European experience with cap-and-trade should sound alarm bells.
The scheme has been repeatedly gamed and manipulated by industry and governments so that emissions have actually increased faster than the those of the United States, with none of the big reductions promised materializing. Industries have enjoyed windfall profits from emission credit trading, and some U.S. firms also have hoped to cash in – Enron and more recently Lehman Brothers were major proponents of American adoption of cap-and-trade policies.
For everyone else, however, results have not been so happy. European households have seen electricity bills rise. Europe has become more dependent on Russian gas. And a recent study by the British think tank Open Europe found the scheme’s major costs accrued to essential public service facilities like schools and hospitals.
Meeting renewable energy targets has been no walk in the park, either. Leaked British government documents reveal how meeting the target of 20 percent of all energy being from renewable sources by 2020 is next to impossible.
In addition, the massive conglomerate of subsidies and mandates necessary for such an energy supply transformation would create large distortions that would severely hamper sound functioning of the market. Indeed, former Business Secretary John Hutton hinted that Prime Minister Gordon Brown should join with more skeptical European countries, such as Poland, to lobby for a reduction in the targets.
Spain, meanwhile, faces the prospect of government-induced “green” unemployment. Spain’s renewable energy sector expanded very quickly due to large government incentives – which the government has since realized are unsustainable, so the industry is now cutting back. While Spanish taxpayers and consumers will pay higher bills for years, the stock value of green energy firms has crashed more than the stock market index, even in these troubled times. Up to 40,000 jobs could be lost in 2009 as the number of “green jobs” contracts.
Moreover, most of these “green jobs” were transitory, anyhow, mostly connected with construction, not operation. A study funded by the German Environment Ministry shows the net effect on job creation – the number of green jobs created minus the number of jobs lost because of higher energy prices – can be positive only insofar as the country remains a net technology exporter. Thus, the net effect on net European job creation can easily be negative.