Another view of this situation was given by Dr Gabriel Calzada, Associate Professor of Economics at King Juan Carlos University during the Heartland Institute's climate change conference in New York last week. In contrast to the Times article, the title was "Spain's new energy economy: Boom and bust of the Spanish renewable miracle".
According to his figures, Spain has increased its emissions by 40% since signing the Kyoto protocol. And yet, in contrast to the government estimate in 2004 that emissions permits would cost Spanish companies no more than 85 million euros annually, the real cost is now estimated at between 3 billion (government statement) and 15 billion euros (Price Waterhouse Coopers).
As for renewable energy, the rapid growth of wind power is not surprising. For the first 15 years, a subsidy of 90% over the market price has been payable, reducing to 80% thereafter. And for solar, in which Spain is also seen as a leader, subsidies have amounted to 575% of the market price for 25 years, then declining to "only" 460%. With returns of 12 to 20%, the take up has been understandably high (indeed, there have been waiting lists).
The result is that installed wind capacity is just over 10% of the total for the country, although it is unclear whether this is theoretical or makes allowance for a realistic efficiency factor. The buoyant market has created around 50,000 jobs, but these are nearly all for installing new capacity and so do not provide long term employment. And they come at a cost: a renewables subsidy of 2.6bn euros in 2007, with about one third of the total going to the solar sector, which represents only 0.7% of installed capacity and about half the total number of jobs.
The costs are such that the government has now had to reduce the subsidy for solar power by 30% and cap the amount of new capacity to be installed. This softening of support resulted in 10,000 job losses. Further reductions of subsidies put 40,000 more green jobs at risk. Energy prices are rising to cover losses in the distribution industry, and generators have announced the cancellation of 4.5bn euros of annual investment because they also pay an effective subsidy for renewable energy through the controlled price to the consumer.
So, with Kyoto emissions targets almost certain to be significantly overshot and the bubble of green-collar jobs now burst, the Spanish government must be wondering how it managed to waste so much money for so little reward. It is difficult to see an economic recovery in Europe (or the USA) being led by a boom in long-term green-collar jobs.