America, take note:
Spain is the latest European country to regret its foray into green energy production. On Friday the Spanish government announced some contentious reforms to its regime of green energy subsidies, which were among the most generous in Europe.
Those subsidies (in the form of guaranteed above-market rates for producers) have been wildly successful at encouraging solar and wind farm construction. They have utterly failed, though, to help build profitable industries. Now the Spanish central government is dealing with a residual tariff deficit of €4.5 billion for this year alone. That’s the difference between the amount Spanish consumers pay for electricity and the cost of producing it.
Not surprisingly, industry groups are outraged over the move. [...]
While environmentalists will no doubt be upset, Spain made the clear choice. High electricity rates are an unnecessary and regressive tax on citizens and a serious drag on industry, and green energy has yet to prove itself competitive without substantial subsidies. Spain is right to cut its losses on its costly green energy boondoggle and to refocus its limited resources on the country’s more pressing problems.