The energiewende good for the economy: why even look at the unfavorable things if you can focus exclusively on the favorable?

Advancing in the Greenpeace brochure, the one-sided arguments just keep on coming. This post will be about the 5th myth: (translated from Dutch):

The Energiewende is detrimental to the German economy

and the summary how they try to debunk it (translated from Dutch):

Meanwhile the Energiewende has created more than 340,000 jobs, both in production and in installing and maintenance of the installations. Especially the latter are local jobs, which therefore can not be delocalized. Germany much better withstood the financial and economic crisis than other countries thanks to these jobs.

Reading the rest of the text, they base themselves on these arguments:

  1. More jobs are created by the renewable energy industry than the coal industry
  2. They repeated the claim that wind and solar makes the price go down
  3. The demand for alternative energy products (solar cells, wind mills, hydro power, batteries and storage, products for the smart grid, efficient technologies,…) will rise and Germany is a potential producer of these
  4. Local ownership strengthen the local economy and keeps the money in the country or even the community.

To start with the jobs. The argument is that the renewable energy industry created jobs, more than the coal industry:

Number of jobs in the renewable energy sector vs the coal sector. The number of jobs has ballooned in the renewable energy sector and is much higher than in the coal sector. Source: BMU

Number of jobs in the renewable energy sector vs the coal sector.
The number of jobs boomed in the renewable energy sector and is much higher than in the coal sector. Source: BMU

No definitions were given what consists of that renewable industry (wind and solar, or also biomass or hydro), nor what they mean by coal sector (hard coal and/or lignite). The source was BMU, but no specific link was given. One thing is for sure: this is only one side of the issue.

First, it might of course be entirely possible that there are more jobs in the renewable energy sector, but they didn’t say anything about the jobs that are lost in the process. Of course, if you only count the blessings, then the end result will be positive. Always. Never fails. But it is the balance that count. From memory I recall that in Spain the ratio was one job in the alternative energy sector versus two lost in the other sectors. If that is the same in Germany, this would mean less employment, not more.

Second, the Achilles’ heel is that these are jobs that depend on a subsidized product. What if these subsidies lower or are taken away? We have been before. In Belgium we also had companies that build on governmental support. When the subsidies for solar panels discontinued, the demand for solar panels plummeted and many installers had to declare bankruptcy.

Over to Germany being a potential producer of alternative energy products. If many countries are increasingly converting to alternative energy sources, then it makes sense that it will be good for the German economy if they are the ones that can deliver those goods. But those products are also produced in Asia and at a much lower price.

Several companies that produced solar cells had to declare bankruptcy around 2011 – 2012. So, yes, those alternative energy products are an opportunity for the economy, if they can compete with the cheaper products from Asia.

The local ownership was not really clear in the brochure, so I went to the link “Energy Transition – The German Energiewende”. Apparently, citizens increasingly form energy cooperatives and they invest in the projects themselves. I can understand that it gives benefits locally if the community makes for example use of local contractors in stead of when the investment is being done by an (international) organization.

They gave the example of the installation of solar hot water collectors to cover part of people’s demand for heat. This means less import of heating oil, therefor more money will stay in the country or even in the community.

Again, this is only one side of the story. Sure, that community will have less oil to import and if energy production was done locally, that money will stay in the community. But that doesn’t take into account that the heating oil seller will lose income (as other people in the chain from production to distribution). If one want to calculate the impact on the community, then the loss of those in the community also needs to be taken into account.

In the end, is the energiewende good or bad for the economy? One thing is for sure: the arguments given are not going to settle that question. the author(s) only looked at the things that supported their case and ignoring what is not. Okay, not unusual in alternative energy reporting. It is even the norm. But in that way it will not be possible to show whether alternative energy is good for the economy or not. If they really want to answer that question, then they will not only have to quantify the things that are good for the economy, but also the things that are bad for the economy.

3 thoughts on “The energiewende good for the economy: why even look at the unfavorable things if you can focus exclusively on the favorable?

  1. poitsplace

    The problem that isn’t new. You cannot make the claim that “jobs created” are meaningful when they’re not brought about through natural market forces.. Green jobs are jobs that produce less product per worker and a product of vastly inferior quality. It takes about 5-10X as many people to produce the power, and it’s very incorporation into the grid costs everyone else extra money and causes inconveniences. Looking at the nuclear/coal they’re meant to replace, society would be FAR better off with the coal and nuclear energy and people producing actual product, than with the same amount of lower quality energy and everyone having less.

    It’s sort of like the claim you sometimes see that regulatory jobs “add” to the economy just because they’re jobs. But when you really stop to think about it, regulatory jobs are WORSE than paying a person to do nothing. That seems counterintuitive until you realize that every regulatory job is literally a job in which the person goes around telling other people to stop working or to do extra, meaningless work (usually paperwork). This is why substantial socialism is just a terrible idea. YES, there are certainly things that need to be done that way (like the military and police) BUT that basic problem remains and their efficiency is terrible…so you must be absolutely certain that such jobs are a necessity.


    1. trustyetverify Post author

      More jobs are a nice argument, but one also could turn it around. Just looking at their own data, coal needed a smaller work force than renewables, even when it was the backbone of the power productions for many decades. Those renewables need a much bigger workforce even with a smaller share. Also knowing that this comparison was probably skewed, when I was reading this chapter I couldn’t help but think about jobs in the former Soviet Union. At that time, they made up as many jobs as they had to, even if these were quite pointless. But on paper, unemployment was virtually non-existing…


      1. poitsplace

        That was my point. What we REALLY care about is jobs relative to economic output. Every regulatory job …needed or not…is technically a negative job (a person paid to do things that stop the work of others). All of the “extra” green jobs would do nothing but increase the cost of the finished product (energy) while simultaneously diverting skilled labor from the workforce…people that would be producing TVs, computers, entertainment, food, etc…a negative change in economic output even before the market gets to settle…while simultaneously increasing costs so the market will settle into a state of output that is lower still.



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