Green Economy – Beware of Merchants of Doubt

Those who oppose change involving powerful economic sectors have long ago found an effective tactic: instilling doubt in the guise of reasonable arguments. A recent manifestation of this tactic is the claim that so-called ‘green jobs’ are too expensive and in fact destroy “real” jobs.

A 2009 Spanish study by the Universidad Rey Juan Carlos for instance argued that a single green job created with public subsidies destroys 2.2 “real” jobs. This study was questioned when it was published by the Wall Street Journal – which no one can suspect to favour state interventionism – because “the study doesn’t actually identify those jobs allegedly destroyed by renewable-energy spending…”

It was also the subject of a counter study by the National Renewable Energy Laboratory, which noted serious methodological shortcomings, noting that the report lacks transparency and statistics to support its conclusions. Even the Spanish Government at the time expressed its surprise that this “study” was taken seriously by anyone as it was based on false data and not sourced.

The study nevertheless got tremendous attention and is still, four years later, being quoted by those keen to instil doubt, for instance recently in an editorial in the French paper Les Echos.

These merchants of doubt’s basic line of argument is that there’s never a good time for the state to correct the negative externalities of our ways of producing and consuming goods and services. Should one for instance put a price on carbon emissions in times of recession? Of course not, it could derail the recovery. Should we do it then when the economy is thriving? Certainly not, this might harm our competitiveness.

Does this sound like a simplistic characterisation? Consider for one moment the arguments put forward by the opponents of the European Emissions Trading System. They are the same today when the price of a tonne of CO2 is hovering around €4 a tonne as when it was at €20 and planned to go to €30.

Of course subsidies for green jobs should be examined critically and questioned, noting however that government support now benefits the polluting sectors far more than the cleaner ones. The International Energy Agency recently in its World Energy Outlook of 2012 estimated in fact that fossil fuels receive globally six times more public support than renewables ($ 523 billion in 2011 against $ 88 billion to be precise).

In phases of creative destruction, every economy has its share of winners and losers. The challenge for governments wishing to engage their country in a process that will lead to greater long-term competitiveness is to distinguish between scare mongering and a distorted bias on short-term losses on the one hand, and the fundamental long-term factors of prosperity on the other.