Subsidies for Green Energy Do Not Help American Consumers

About Daniel Kish:

Dan Kish is a senior vice president for policy at the Institute for Energy Research. Kish has more than 25 years of experience on congressional committees focused principally upon of natural resource and energy policies.

Politicians are learning what the American people have known for years: Uncle Sam is a pretty lousy investor and a terrible venture capitalist. In recent months, the evidence has mounted. From Solyndra to Soperton, the federal government has pumped billions of taxpayer dollars into countless "green energy" companies.

Simply, the government should not be picking winners and losers. No source of energy requiring heavy government subsidies or that government forces you to buy should receive taxpayer money. In the end, the government is hurting the American people.

[See a collection of political cartoons on energy policy.]

The game goes like this: The government taxes the American worker, and then takes a portion of those tax dollars and gives it to Solyndra or another favored political ally of whomever has power in Washington. Then it forces the utilities to buy the energy. Taxpayers' money is needed to keep the apparent energy costs from the green sources down because if the real cost were paid directly by consumers on their monthly electric bills or at the gas pump, they would revolt.

In fact, if development of these sources made any economic sense, private sector job creators would be lining up to do it. Case in point: Look at what has happened with the shale energy revolution in places like Pennsylvania and North Dakota. When energy is affordable and technology is available, Americans will unleash the power of innovation and risk their own capital to develop any source. In fact, 1 in 5 new jobs created since 2003 has been oil- and natural gas-related.

But with green energy, firms need Uncle Sam to ensure their profit. Since 2007, total federal energy subsidies increased from $17.9 billion to $37.2 billion. Seventy-seven percent of that increase is due to the Obama administration's stimulus. Renewable subsidies increased 186 percent, led by wind energy, which received a 10-fold increase to nearly $5 billion. None of this, by the way, has kept energy prices down. Electricity prices have increased by 23 percent in the last five years.

[Check out the U.S. News Energy Intelligence blog.]

Meanwhile, the government is rigging the game through mandates that force American consumers to buy green energy sources to meet the requirements of the law. Currently, 29 states have green energy mandates that require a certain percentage of the states' electricity to be generated from these sources. Among states with renewable mandates, consumers pay on average 38 percent more for electricity.

The evidence is clear: Federal subsidies for green energy sources do not help American consumers or ensure the economic viability of green energy companies like Solyndra that can't turn a profit even with half a billion dollars in taxpayer money.

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