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Spain’s Green Economy: Skyrocketing Power Prices And Higher CO2 Emissions

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Michael Bastasch DCNF Managing Editor
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President Obama once frequently touted Spain’s green energy economy. No longer. That’s no surprise given how things have worked out for the economically beleaguered country.

According to a new report by the free-market Institute for Energy Research, Spain’s green energy policies have resulted in skyrocketing electricity prices, billions of euros in debt and rising carbon dioxide emissions.

“For years, President Obama has pointed to Europe’s energy policies as an example that the United States should follow,” said IER in a statement on their new study. “However, those policies have been disastrous for countries like Spain, where electricity prices have skyrocketed, unemployment is over 25 percent, and youth unemployment is over 50 percent.”

Spain began heavily subsidizing green energy sources, like wind and solar, in the early 2000s with its“Promotion Plan for Renewable Energies. The country used a combination of generous feed-in tariffs, green energy generation quotas and green power subsidies to boost renewable energy development in the country and lower its carbon dioxide emissions.

By 2009, Spain had greatly expanded its green energy industry, earning praise from international leaders, including President Obama.

“And think of what’s happening in countries like Spain, Germany and Japan, where they’re making real investments in renewable energy,” Obama said in 2009. “They’re surging ahead of us, poised to take the lead in these new industries… There is no reason we can’t do the same thing right here in America.”

But what seemed like a booming green energy economy on the surface was really becoming a costly way to help drive Spain into economic recession. By 2011, Spain’s electricity prices stood at 29.46 U.S. ¢/kilowatt-hour — two and a half times what electricity cost in the U.S. at the time.

It was also becoming apparent that Spain was not going to be able to keep paying for its green energy agenda. The country racked up a $41 billion “rate deficit” — the difference between what utilities pay and what they can charge for consumers. In the face of high rate debt, about $850 per person, the government has had to raise power prices and energy taxes to cover the costs.

Higher taxes and costs aside, Spanish household electricity prices rose 92 percent between 2005 and 2011. Spanish industrial electricity costs grew by 78 percent during this time as well.

Spain has actually been scaling back its costly green energy agenda the past year or two in the face of high debt and unemployment. The country cut wind subsidies to major wind farms back in February and, in June, Spanish officials announced a new electricity rate schedule that effectively ended green energy feed-in tariffs.

The IER study also notes that Spain’s green agenda was not able to keep its carbon footprint from rising. Between 1994 and 2011, Spain’s carbon dioxide emissions grew 34.5 percent, despite the country’s green push which began in the 1990s.

“While the renewable policies themselves were likely not the cause of the emissions increase, the upward trend does prove that renewable energy policies were insufficient to reduce CO2 emissions over a roughly twenty-year period,” according to IER.

“is anything but the model for American energy policy,” reads the IER study. “The country’s expensive feed-in tariff system, subsidies, and renewable energy quotas have plunged a sizable portion of Spaniards into fuel poverty, raised electricity bills, all while having almost no meaningful impact on curtailing carbon dioxide emissions.”

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