Green dreams die hard. That’s what Spain is finding out, as the country looks set to greenlight exploratory oil drilling off the coast of the Canary Islands. There could be more than 2.2 billion barrels of oil there to tap, and if all goes to plan, the underwater field could produce a tenth of the country’s crude consumption. Not surprisingly, environmentalists are up in arms over the impending decision, and not just for their usual opposition to fossil fuels projects, but also because of the signal this seems to send: Madrid has slowly but surely walked back on expensive and unprofitable renewable energy subsidies in recent years, and drilling in the Canaries looks to be the cherry on top of that retrenchment sundae. The FT reports:
The decision to greenlight the Canaries project is part of a broader policy shift in Spain, which has slashed subsidies for renewable energy and is now betting on a revival of domestic hydrocarbon production. Madrid’s new stance is partly the result of the recent economic downturn but it also reflects a broader trend across Europe, as governments struggle to reduce their dependency on foreign oil and lower the cost of energy for their recession-hit industries.“For many years, under the previous Socialist government, Spain was pushing alternative energies very strongly, especially solar and wind. But now the music has stopped,” says Mike Rosenberg, a professor at Spain’s Iese business school. “Now, it is all about reducing the country’s tremendous dependence on foreign fuel, by allowing oil drilling and hydraulic fracturing [fracking].”
At the end of the last decade, Madrid guaranteed solar and wind farm producers long-term, above-market rates for their efforts, and the country’s fledgling renewables industry blossomed. But just as it was in Germany, the bill for those so-called feed-in tariffs eventually came due, and the Spanish government was forced to hike electricity prices and slash subsidies. This was an experiment on a national scale, and it was a colossal failure.And now, the pendulum swings back towards a more pragmatic energy policy, one less informed by pie-in-the-sky green dreams, and more grounded in economic reality. There’s a lesson to learn here, if greens can bear to see it: renewables can’t yet compete with fossil fuels on their own merit, and elaborate government subsidy schemes to prop up current-gen turbines and panels won’t change that. Funding the research and development of more efficient renewables technology is a better strategy, but in the meantime, it’s drill, baby, drill.