Contributed by Robert Lyman © 2020. Lyman’s bio can be read here.
EMPTY POCKETS:
WHY RENEWABLES OFFER NO RESILIENT RECOVERY Part 3 – Executive Summary
In this part, I will offer views and evidence as to why the economic spinoffs of increased government spending on so-called “clean energy” will harm Canada’s economy far more than help it.
I and others have written about the economic toll already imposed on Canada by climate policies. In assessing the potential economic effects of ever more climate-inspired policy measures, therefore, we know that the costs to date already have had a large negative effect.
“CLEAN TECHNOLOGY” IS NOT A GROWTH INDUSTRY IN CANADA
Statistics Canada refers to a group of economic activities as “clean technology”, and groups them in two categories: “clean energy and environmental goods and services” and “the environmental and clean technology products account”.
The Clean Technology Goods and Services category is very diverse. Of the total income to this category in 2017, $32 billion, most of it is in industries not related to climate policies (e.g. equipment and services relating to waste management, site remediation, water management, municipal sewage treatment and spill response, and others). In fact, arguably, only about $5.5 billion of the total is unquestionably driven by climate policies.
The Environmental and Clean Technology Products Account, usually referred to by the government as the “Clean Technology Sector”, had a total income in 2018 of $66.3 billion. This account’s share of Canadian GDP has been about 3% since 2007, despite the fact that Statistics Canada constantly adds more industries to the category. For over a decade, the Environmental and Clean Technology Products Account has held a shrinking share of Canada’s economy.
THE CLAIMS ABOUT “GREEN JOBS” ARE EXAGGERATED
According to Statistics Canada, an estimated 317,000 jobs were attributable to the Clean Technology sector (as previously described) in 2018, comprising 1.7% of all jobs in Canada.
The goal of Canada’s energy sector is not to create as many jobs as possible, especially in politically-favoured and heavily subsidized renewable energy industries. Rather, the economic goal is to produce as much energy as possible at the lowest possible cost, and that means doing so with the fewest energy workers. It is a common mistake of politicians and the media to treat jobs as an economic benefit, when in fact jobs are an economic cost, or price of production. The appropriate economic objective is to have the fewest number of workers producing the highest amount of output. The higher productivity, other things equal, justifies higher wages per worker.
Advocates of renewable energy subsidies and mandates do not consider the direct and indirect adverse effects (including job destruction) on a wide array of energy-intensive industries, and the effects of increased prices for consumers. Experience in other countries provides ample evidence of this. Studies in Spain, Italy, Germany, Denmark and the United Kingdom all found that for every job created in the renewable energy sector, two to three jobs were lost in energy consuming sectors of the economy.
Government intrusion into energy markets amounts to little more than attempting to prematurely force businesses to abandon current generally well-known and proven production technologies for new and more expensive ones.
CONCLUSION
Experience in other countries and in Canada shows that the economic spinoff effects of policies that divert money from the general economy to subsidize renewable energy result in lower value employment in the “Clean Tech” industries, disproportionate loss of employment and income in the broader economy, higher costs for consumers and loss of competitiveness. Despite immense subsidies and a long list of government-conferred advantages, the “Clean Tech” industries hold a smaller and smaller share of Canada’s economy. This is not the way to a post-coronavirus resilient economy.
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