In reality, the Kammen et al study from the US is not really contradictory to the European studies cited, including the Spanish and Danish studies. Kammen et al focus almost exclusively on job creation due to additional power generation, a limited metric since it does not factor in the opportunity cost of government subsidies for renewable energy. For a given unit cost difference between a renewable energy source and an alternative, the opportunity cost increases with the amount of energy created. Moreover, the greater the cost gap between a renewable energy source and its alternative, the more expensive per unit is the renewable energy production and thus the jobs created per unit of additional renewable energy.

Overall, these studies strongly indicate that government support to producing and developing renewable energies is not a very efficient way of creating additional short-run employment in high-income countries; at least, not when appropriately accounting for the opportunity cost of public funds going into such support. This is perhaps most clear from the Ragwitz et al (2009) study for the entire European Union, which is the deepest and best documented of these studies. This conclusion goes against some officially touted public views; but is in our view not really surprising. The main rationale for public support to renewable energy production in high-income countries is, and must be, its long-run R&D perspective (in addition to a possible “energy security” motivation), with the presumption (or perhaps hope) that unit production costs will come down, perhaps dramatically, over time. Otherwise, such support will remain a perennial drain on fiscal resources, and this public money could, overall, be better spent elsewhere.

As already emphasized, the numbers and analyses presented for high-income countries are not necessarily applicable to most developing countries. In part this is because some of the activities (including significant R&D for new green energy) are outside the scope of what many developing countries are likely to undertake, whatever might be their effects on economic activity in richer countries. For types of projects that are relevant for developing countries, employment effects per unit of spending are in some cases likely to be greater, given lower labor productivity.<sup>25</sup> But in other cases, the direct employment effects per unit of spending could be smaller in developing countries – as when renewable energy projects do not lead to expanded domestic manufacturing but rather to increased imports for the equipment.

One of the most important issues from a developing country perspective is the relative effects compared to impacts of “non-green” infrastructure projects. One category of non-green infrastructure investments likely to _increase_ carbon emissions, namely road investments, is included for comparison (in the bottom line of the table). For this project type, the employment effect per dollar spent is less than the average for “green” programs, by about one fifth.<sup>26</sup> Unfortunately, without a more detailed data base it is not possible to make judgments about how the relative performance of these categories might vary in developing countries. However, there are a good number of examples where an expanded and upgraded road system increased employment and output, even if it also raised GHG emissions.

To sum up, the employment effects of different direct green stimulus programs relevant for developing countries vary for two main reasons. First, overall labor productivity may vary; then the employment effect of a given spending will tend to be greatest where labor

> 25 This would be the case in which stimulus activities raised productivity as well as contributing to reduced environmental stress.

> 26 The difference with respect to energy costs and carbon emissions is of course relatively speaking much greater, since road investment projects tend to _increase_ such costs “down the road”, as seen from the table.

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