JULY 21, 2013


This week, Australia and Spain both cancelled most or all of their enormous subsidies for green energy. Germany has done so already. And Britain is expected to follow suit shortly.

Why? The subsidies are expensive and utterly useless. No matter how much money governments throw at wind power, solar power or other alternate energy sources, the results are always the same: Little or new energy is produced and there is no reduction in carbon emissions despite the billions thrown at green projects.

The Spanish government, like most European governments, is staggering under a mountain of public debt after having used borrowed money for decades to pay for massive social benefits.

Spain’s green energy subsidies were among the most generous in Europe – about $5.75 billion annually in a country of 47 million people. Madrid’s deep commitment brought it much praise from environmentalists who have held Spain up as a shining example of what governments can achieve if only they find sufficient will to act.

Except all of Spain’s expensive actions have led to nothing: no energy revolution, no new green jobs, no reduction in greenhouse gases.

Madrid’s chosen form of subsidy, like Ontario’s, has been to vastly overpay producers of alternate energy for the meager amounts of non-carbon electricity they provide. As in Ontario, this has meant billions given to windmill companies and solar panel owners even though their projects are uneconomic and their electricity is hard to get to market.

From the beginning, Spain was warned by free-market economists that its plan was destined to fail – and bound to waste billions of tax dollars. But, as with so many governments and environmentalists, Spain has been guilty of magic-wand thinking: If only it would spend enough money giving green energy a nudge, non-carbon energy would magically become profitable and painlessly replace carbon-based based fuels such as oil, natural gas and coal.

Well, when nudging didn’t produce the promised results – dynamic new industries and scads of new, well-paying, morally satisfying “green” jobs – Spain decided to try a two-handed shove to get its alternate energy sector going. If small subsidies weren’t enough, surely big ones would be.

That didn’t work either. Indeed, it’s hard to believe thinking people ever believed it could.

Green energy hasn’t failed to replace traditional sources because of lack of public funding. It has never rivaled traditional energy because economically it can’t.

Just look at solar energy.

With traditional energy, the power is generated comparatively cheaply in centralized locations. From there it is distributed to consumers via an electrical grid. With solar energy, the power is produced in smaller amounts in decentralized locations from which it must be collected via a grid only to then be redistributed to customers.

Despite billions in tax dollars given to Spanish (and Ontario) solar producers, no one has yet found an economic way to connect thousands of collection sites to millions of consumers.

The solution, so far, has been for governments to overpay for solar power (sometimes on the order of 20 times the market rate for electricity) in hopes that somehow this would provoke a profitable industry. But that was self-evidently doomed to fail from the start.

Wind power is simply too unpredictable. For instance, too often when it is hot and more power is needed to run air conditioners, it is also calm. There is simply no wind to generate power.

Australia announced this week it was giving up on carbon taxes that were adding hundreds of dollars to Australians’ power bills without any appreciable reduction in power consumption or emissions.

These countries are coming to realize green energy is a dream, only – and a very expensive one.


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