Subcommittee Questions Value of Government Incentives to Create ‘Green Jobs’

Apr 13, 2011
Subcommittee Questions Value of Government Incentives to Create ‘Green Jobs’

Washington D.C.– Today in a hearing before the Subcommittee on Investigations and Oversight, witnesses questioned whether or not federal funding to promote ‘green jobs’ is a wise use of scarce dollars.  Many aspects were brought into question regarding the necessity of these programs, and several witnesses highlighted the harmful influences they have on the economy.

“The economic crisis of 2008 provided the opportunity to expand government’s role in a number of different areas – one of the most prominent was the energy sector,” stated Subcommittee Chairman Paul Broun (R-GA), “This expansion was meant to be ‘timely, targeted, and temporary,’ yet spending is still ongoing today.  One of the highlights of the stimulus bill’s energy agenda was the notion of creating green jobs that would spur employment, aid the environment, make us more secure, and keep us competitive.”

Broun continued, “It seems as though this Administration’s energy and green jobs agendas are built upon financing foreign investment and production.  On one hand, the Administration is limiting development of oil production in the Outer Continental Shelf.  On the other hand, it is promoting the development of oil off the coast of Brazil.” 

Prior to enactment of the American Recovery and Reinvestment Act of 2009 (ARRA), also referred to as the ‘Stimulus,’ the Federal Government already provided a series of incentives for users and producers of green energy.  These incentives were continued, and in many cases, expanded with the enactment of ARRA, including: tax incentives, loan guarantees, subsidies, mandates, and regulations.

A leading economist today told the Committee that the costs of such programs outweigh any environmental or job-creating benefits, and often make the technologies more expensive. “Federal funding and standards to promote adoption of green technology are unnecessary to achieve the environmental goals that have been accepted in public policy,” said Dr. David Montgomery, Vice President of NERA Economic Consulting. “For the economy as a whole, these large expenditures and requirements only serve to increase the cost of achieving the goals of environmental policy by predetermining which technologies will be favored.”

By placing restrictions and limitations on certain energy sectors, governments can artificially influence the market by creating a disincentive for certain energy sources and technologies, therefore making others more financially viable. This increased demand creates jobs in a new sector, but as some argue, this comes at the detriment of employment in the regulated sector. 

“The idea that the government can create jobs on net in the economy is a myth, and painting the myth green makes it no less of a myth,” said Dr. Kenneth Green, Resident Scholar at The American Enterprise Institute, “The experience of Europe, which has preceded us in the quest for a new green economy, is uniformly negative, and is proving unsustainable, with subsidies being cut back, and fee-in tariffs reduced. There is absolutely no reason to believe that things would happen differently here.”

Other witnesses took a more broad economic view of green energy subsidies.  Dr. David Kreutzer, Research Fellow in Energy Economics and Climate Change at The Heritage Foundation emphasized that “there is no money shed from which the government can finance all the green subsidies. These resources are extracted from other parts of the economy. They do not, and cannot, come from outside the economy.”

Kreutzer maintained that “Forcing taxpayers to subsidize energy they would not buy at its full price does not save them money, nor does it make production more profitable. Raising costs of production and reducing consumers’ real income does not stimulate the economy.”

The following witnesses testified today before the Subcommittee:

Dr. Kenneth P. Green, Resident Scholar, The American Enterprise Institute

Dr. David Kreutzer, Research Fellow in Energy Economics and Climate Change, The Heritage Foundation

Dr. Josh Bivens, Economist, Economic Policy Institute

Dr. David W. Montgomery, Vice President, NERA Economic Consulting

Mr. William Kovacs, Director of Environment, Technology & Regulatory Affairs Division, U.S. Chamber of Commerce