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Opinion | Windmills damage welfare and employment

Economics professor argues that Denmark has invested in a failed premise


Investments in wind power, and the subsidies that come with it, are hurting the economy and not helping the environment the author says (Photo: Colourbox)

July 19, 2013
11:45

by Henrik Lando


As part of Denmark's energy plan, parliament increased the nation's investments in both on- and offshore windmills. For onshore windmills, the plan meant erecting 600 industrial facilities before 2020, making Denmark the country most heavily investing in windmills worldwide.

The investment will cost Danes billions of kroner and it will not increase employment. Nor will it benefit the climate.   

It is irrefutable that the investment is costly for Danish economy. We are already paying around three billion kroner annually to windmills for PSO (Public Service Obligation) duties. In coming years that amount will rise to as much as eight billion kroner as more windmills are erected. New windmills receive additional subsidies of roughly nine billion kroner during their life spans.  

That windmills fail to benefit the climate is a consequence of Denmark’s membership in the EU’s quota scheme. Every time a windmill is erected, we make it cheaper to use coal in other EU countries.

Furthermore, windmills fail to help with unemployment. This is demonstrated in the possible outcomes of investing billions of kroner elsewhere. For example, we could support energy renovation in older homes. This would benefit the environment while not be encompassed by the quota scheme and it would spur employment since energy renovations are already profitable and cost less amount for each job that is created. Morten Albæk from Vestas wrote in Berlingske newspaper earlier this month that wind energy is cost-competitive due to the fact that conventional energy receives more subsidies than wind energy. But this is the usual manipulation of numbers by the windmill industry. Albæk’s figures only serve to show that developing countries subsidise energy consumption for political reasons. It is not indicative of the cost competitiveness of wind energy.

Wind energy is not just uneconomical in its few jobs per subsidy krone. The subsidies are paid for by households and companies through electrical bills. As a consequence, it stifles employment by diminishing Danes’ purchasing power and lowering the competitiveness of the nation's companies.

Denmark’s focus on wind energy relied on the premise that wind energy on its own would be competitive. That premise was wrong. Wind energy is not beneficial to the climate, puts a strain on Danish economy and increases unemployment. The sooner the energy settlement can be renegotiated the better for the Danish economy.

The author is a professor in contract economics at Copenhagen Business School



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