Subsidy Culture Undermines UK’s Green Industry

  • Date: 31/10/16
  • Jonathan Ford, Financial Times

Job creation alone does not equate to a benefit for the economy

One of the claims often advanced for renewable energy is that it will lead to a bonanza of what are called “green jobs”. It is a way of justifying the upfront costs involved in switching the nation’s energy production to these low carbon sources. The idea is that Britain will ultimately earn squillions from the exciting new technologies that its green entrepreneurs will forge and sell.

It is why the industry is so keen to insert itself into prime minister Theresa May’s newly proposed — but as yet unexplained —industrial strategy. Promoters see it as a way of ensuring the cash does not dry up.

Ministers should treat these tales of untold industrial benefits with considerable caution.

No one denies that green technologies create employment. Figures from the Renewable Energy Association, a trade body, suggest that 117,000 people are already beavering away in the sector and its supply chain. But job creation alone does not equate to a benefit for the economy. What ultimately matters is the extra output produced by these new workers. For the exercise to be worthwhile, its value must exceed the wider costs, including the impact on alternative production and employment.

Of course, employment is not the only claim made by the green proponents. They also argue that environmental policies will promote the development of new industries, which will become steadily more efficient. By being early into the field, Britain can build up technical expertise that will lead to valuable export orders when other slower countries scramble to reduce their own emissions.

But, once again, these claims unravel on closer inspection. They depend heavily on the idea that sales of this kit will be driven by technological innovation, and that countries such as Britain will be able to hang on to high market shares by dint of their know-how. In fact, the available evidence points the other way.



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