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Obama’s Green Jobs Cost Big Bucks

by Benn Steil and Dinah Walker
November 2, 2012

green jobs

President Obama is committed to pursuing a “[renewable-energy] strategy that’s cleaner, cheaper, and full of new jobs” (January 24, 2012). He highlighted the job point during the October 16 presidential debate: “I expect those new energy sources to be built right here in the United States. That’s going to help [young graduates] get a job.”

Green may be good, but this week’s Geo-Graphic shows that the jobs come at a hefty cost.

The Joint Committee on Taxation estimates that energy-related tax preferences will cost Americans $5.4 billion this year. Half of this, $2.7 billion, will benefit green sectors: $1 billion in nuclear subsidies, $1.3 billion in wind-energy credits for electricity production, and $400 million in solar-energy property credits.

So-called “section 1603” renewable energy grants, part of the 2009 fiscal stimulus package, will cost taxpayers a further $5.8 billion. If we assume that the grants are awarded across sectors in the last five months of this year as they were in the first seven, then the nuclear, solar, and wind energy sectors will receive $4 billion of this, boosting total green-sector subsidies to $6.7 billion this year.

Taxpayers will also provide $700 million in energy-efficient property credits. The credits apply mainly to solar, though we don’t know the precise allocation – so we leave it out of the figure, which therefore understates the cost of solar-backed jobs.

Dividing the total wind, solar, and nuclear subsidies by the number of Americans employed in these sectors (252,000), they are currently generating jobs at an average annual cost to taxpayers of over $29,000. Wind jobs cost taxpayers nearly $47,000 per job per year.

By way of comparison, the coal, oil, and gas sectors receive $2.7 billion in subsidies annually, and employ about 1.4 million Americans. The taxpayer-cost per job in these sectors is therefore just over $1,900.

The bottom line is that green-energy jobs cost taxpayers, on average, 15 times more than oil, gas, and coal jobs. Wind-backed jobs cost 25 times more.

Given the current state of energy-production technology, green jobs don’t come cheap.

Romil Chouhan contributed to this post.

NYTimes.com: Transcript of the Second Presidential Debate
Treasury: Overview and Status Update of the Section 1603 Program
Bloomberg.com: U.S. Solar Jobs Face Bright Future, Wind Posts Flutter
Foreign Affairs: Tough Love for Renewable Energy

Post a Comment 3 Comments

  • Posted by Alan Stoga

    The arithmetic is right and even interesting. Of course, it begs the question why we subsidize oil, gas and coal at all. IS there any evidence that we would have less production of those fuels (and, hence, fewer jobs) in the absence of the subsidies? In other words, what national interest drives subsidizing mature, highly profitable industries?

  • Posted by dave444

    How would politicians pay off their friends if there was no subsidy
    money available? Its just like the farm subsidies and the Enthinol fiasco.

  • Posted by Bill Reichert

    This is a very misleading analysis. I suppose this is one way to do the math, but it is not very useful, nor does it measure what it purports to measure. To be useful, the analysis should show how many jobs were created in each sector that would not otherwise have been created per dollar of tax expenditure. Probably even more useful would be to show how much incremental GDP was generated per dollar of tax expenditure. Of course, that data is much much harder to get, but that does not justify the analysis above. Is there a chance that the authors will dig out the data and provide a follow-up to this posting?

    Perhaps the authors could also provide an infographic that shows tax expenditures per billionaire vs. tax expenditures per person in poverty. That infographic would swamp the difference between solar and fossil energy shown above. Would it be meaningful as a measure of the impact of public policy? Perhaps, but it would also be misleading lacking more context.

    I am actually very supportive of the implicit message that we should measure the costs and benefits of our tax expenditures, and indeed our expenditures on cleantech clearly have not been entirely efficient and effective. But the analysis above muddies the debate. It does not clarify.

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