NCPA - National Center for Policy Analysis


January 19, 2009

Is a "Green Economy" the cure for our current economic ills, global warming and energy security?  Proponents claim that this view -- where government at all levels can use fiscal and regulatory measures to spur massive new investments in renewable energies and energy efficiency to create "green jobs" -- will not only rescue the economy, but will also put the country on track to a sustainable, low-carbon energy future.  Unfortunately, it is highly questionable whether a government campaign to spur "green jobs" would have net economic benefits.

In their new study, Robert Michaels and Robert P. Murphy of the Institute for Energy Research examined four studies on the alleged benefits of government programs to foster green job creation and found a common characteristic: they all rest on incomplete economic analysis consequently overstating the net benefits of their policy recommendations.  Below is a summary of the general problems:

  • Mistaking a labor-intensive energy sector as the goal, rather than efficient energy provision.
  • Counting job creation but ignoring job destruction.
  • Double counting of jobs and overly simplistic treatment of the labor market.
  • Ignoring the role of the private sector.
  • How much government support of "green" markets is enough?
  • Government picking of winners and losers.
  • Assuming that potential benefits from new technologies will only occur through government programs.

With no standardized definitions of the renewable and energy efficiency industries, authors of these reports have a wide range of plausible choices.  But the larger the percentage of the workforce engaged in producing renewable power and efficiency, the smaller the output of other goods, say Michaels and Murphy.

The fact that building and operating renewable power generators requires more labor time than for conventional generators is a signal that the nation should not rush toward renewable.  The public is worse off because it sacrifices the outputs that those workers could have produced had they been employed elsewhere, says Michaels and Murphy.

Source: Robert Michaels and Robert P. Murphy, "Green Jobs: Fact or Fiction? An Assessment of the Literature," The Institute For Energy Research, January 2009.

For text:


Browse more articles on Environment Issues