Do energy mandates kill jobs or create jobs? Does government subsidy of energy projects create jobs?
According to Severin Borenstein, E.T. Grether Professor of Business Administration and Public Policy, and former director of the Energy Institute at UC Berkeley Haas School, the pursuit of “green jobs” misses the point. Environmental and energy regulations should rise and fall on their own merits, not because of some tenuous claim that jobs will be created.
But don’t take my word for it, read it for yourself.
Linking new regulations with green jobs is a favorite trope of mandate advocates. Upon introducing his new package of climate change legislation, Senate Leader Kevin De León stated, “Clean tech companies in California are creating more jobs and investing more money than competitors in any other state, and these policies will keep this momentum going and expand its reach.”
According to Borenstein, bean-counting new jobs misses the big picture.
But the fundamental fallacy of counting jobs is that any government policy alters demand, supply, prices and wages throughout the entire economy. Higher energy prices cause some energy-using industries to contract, reducing employment. Higher taxes that pay for subsidizing an energy source make some companies less inclined to expand. Reports of “green job creation” or the “jobs that will be created by Keystone” are just data cherry picking, not real analysis.
Outside of recessions – which is most of the time – the key drivers for energy policy, according to Borenstein, should be (1) maximizing the economic value energy creates (i.e., productivity, affordability) and (2) minimizing environmental impact and energy security risks. But “not to ‘create jobs.’” And that goes for arguments promoting the Keystone XL pipeline as much as those urging a crackdown on petroleum fuels.
Government obviously has an important role in energy policy – regulating or pricing to mitigate negative environmental impacts and supporting R&D to advance societal benefits.
But job creation should be left to the experts in the private sector.