Economic impacts from the promotion of renewable energies: The German Experience (PDF 358KB)

Washington, DC – Though proponents of so-called government-funded ‘green jobs’ often reference the ‘success’ European countries have enjoyed in their experiments with such regulations and mandates, a study released today in the United States sheds new light on Germany’s experience with renewable energy and heavy taxpayer subsidies. Entitled ‘Economic impacts from the promotion of renewable energies: The German Experience,’ the study was published by German think tank Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI).

According to the study, “Germany’s experience with renewable energy promotion is often cited as a model to be replicated elsewhere, being based on a combination of far-reaching energy and environmental laws that stretch back nearly two decades.” Researchers add this: “German renewable energy policy … has failed to harness the market incentives needed to ensure a viable and cost-effective introduction of renewable energies into the country’s energy portfolio.”

Thomas J. Pyle, president of the Institute for Energy Research (IER) – a non-partisan market-oriented energy think tank – issued the following statement:

“Today, Vice President Biden will tout the economic benefits of ‘green jobs’ and ‘green energy.’ However, this new analysis from Germany only further emphasizes the fact that when renewable energy has been mandated and subsidized by taxpayers, economies have constricted and suffered. Germany, like Spain, is just another example of how billions of tax dollars forced to support wind and solar energy create not a hint of economic or environmental benefits.

“Some in Washington, who are working to restrict, mandate and subsidize certain energy forms that would otherwise be unaffordable, continue to offer Germany as a case-study for success. However, such a policy could increase electricity prices nearly 20 percent and require a subsidy of nearly $240,000 dollars per ‘green job.’

“This study should serve as a cautionary tale of what is likely to occur should the US continue down the road of mandating politically-favored, expensive power. We would be well served to learn from, and not repeat, the mistakes of Germany, Spain and Denmark.”

Key findings:

  • Financial aid to Germany’s solar industry has now reached a level that far exceeds average wages, with per worker subsidies as high as $240,000 US.
  • In 2008, the price mark-up attributable to the government’s support for “green” electricity was about 2.2 cents US per kWh. For perspective, a 2.2 cent per kWh increase here in the US would amount to an average 19.4% increase in consumer’s electricity bills.
  • Government support for solar energy between 2000 and 2010 is estimated to have a total net cost of $73.2 billion US, and $28.1 billion US for wind. A similar expenditure in the US would amount to about half a trillion dollars US.

  • Green jobs created by government actions disappear as soon as government support is terminated, a lesson the German government and the green companies it supports are beginning to learn.
  • Government aid for wind power is now three times the cost of conventional electricity.

On Monday, report co-author Dr. Colin Vance will be in Washington, D.C., part of a three-day tour (Monday-Wednesday) aimed at explaining to a wider American audience the core conclusions of their report. Those interested in speaking with Dr. Vance or setting up an interview should contact Patrick Creighton (202.621.2947) or Laura Henderson (202.621.2951).

More on the RWI Study

  • In pictures: Impact on electricity rates by region and by state

For additional information, please contact Patrick Creighton, 202-621-2947, or Laura Henderson, 202-621-2951.


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