Should the Government Invest in Green Energy? >
Competition, Not Handouts, Should Determine Role of Green Energy
Market, not subsidies, should determine the role of green energy in U.S. economy
January 18, 2012
About Nicolas Loris:
Nicolas Loris focuses on energy, environmental, and regulatory issues as a policy analyst in the Roe Institute for Economic Policy Studies at the Heritage Foundation. Before joining Heritage in June 2007, Loris was an associate at the Charles G. Koch Charitable Foundation, immersing himself for a year in a market-based management program.
The old adage "If it ain't broke, don't fix it" is one that does not apply to the government's investment in green energy. Subsidizing inefficient, expensive technologies is a broken policy that has a simple solution: Stop picking winners and losers in the energy sector and eliminate all subsidies.
The primary justification for investing in green energy is that those investments create green jobs. Government spending will "create" jobs in the sense that subsidies will allocate labor and capital to build windmills and solar panels. Plus, it looks good come election time when a member of Congress can point to that plant and tell his constituents he or she created those jobs.
[See a collection of political cartoons on energy policy.]
But government "investments" take from one (by taxing or borrowing) and give to another. When the government gives money to build a windmill, those resources cannot simultaneously be used to build other products. At best, there's no new job creation but an extraction of resources from one sector of the economy to the politically preferred green sector. And since taxpayer dollars are subsidizing expensive, inefficient sources of energy, those resources could be used more efficiently in the private sector, and consequently, U.S. economic growth suffers on net.
No evidence exists to suggest that the government has better knowledge to make investment decisions or to commercialize technologies when the private sector chooses to bypass these opportunities. If there is a role for alternative sources in America's energy portfolio, it should be dictated by price and competition, not government handouts.
The energy market can be diverse and competitive without government interference.
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- Other Arguments
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#111171
Yes — Handouts prop up nuclear, coal, and oil, so why not new technology?
JAMES GERSTENZANG, DANIEL BECKER, Advocates at the Safe Climate Campaign
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#29265
Yes — Green energy investments pay off in the long run
CHRISTOPH STEFES, Professor at University of Colorado, Denver
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#38375
No — Uncle Sam is a lousy investor and a terrible venture capitalist
DANIEL KISH, Senior Vice President for Policy at the Institute for Energy Research
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#56159
Yes — Research, development are key to solving U.S. energy needs
MAUREEN RENO, Energy Economist at the Union of Concerned Scientists
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#66163
Yes — Government has played an important role in supporting emerging industries critical to prosperity and security
STEVEN CHU, U.S. Secretary of Energy
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#76076
No — If green energy is commercially promising, then profit-hungry capitalists will make those investments
JERRY TAYLOR, Senior Fellow at the Cato Institute
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#84060
Yes — Forget Solyndra: Conventional fuels get more handouts than clean energy does
ERIC POOLEY, Vice President for Strategy and Communications at the Environmental Defense Fund
