Conservatives managed two quiet wins in their first year of controlling the House, although it took the Washington Post to notice both of them. After 30 years of federal subsidies for corn-based ethanol, Congress finally put an end to the program by refusing to renew the “green” energy technology program, which the Post notes did nothing to reduce greenhouse-gas emissions. Neither did the protectionist tariff on ethanol imports, which had the curiously self-defeating result of making the supposed “green” fuel more costly and less impactful on American oil consumption, and that also expired at the end of 2011. That will save taxpayers $6 billion a year.
Now, the Washington Post’s editorial board says, it’s time for Congress to kill “the federal government’s bad investment in electric vehicles”:
Meanwhile, a lesser-known but equally dubious energy tax break also expired when the year ended Saturday: the credit that gave electric-car owners up to $1,000 to defray the cost of installing a 220-volt charging device in their homes — or up to $30,000 to install one in a commercial location. As a means of reducing carbon emissions, electric cars and plug-in hybrid electrics are no more cost-effective than ethanol. What’s more, only upper-income consumers can afford to buy an electric vehicle (EV); so the charger subsidy is a giveaway to the well-to-do.
The same goes for the $7,500 tax credit that the government offers purchasers of electric vehicles, a subsidy that, alas, did not expire at year’s end. The Obama administration says that the credit helps build a market for EVs, which helps create jobs. Given the price of eligible models, like the $100,000 Fisker Karma, that rationale sounds an awful lot like trickle-down economics.
Backers of the charger tax credit may lobby Congress to renew it when lawmakers tackle the payroll tax extension issue again in the new year. We hope that Congress says no. Not only is it a case study in upward income redistribution, it also would represent a deepening of the taxpayers’ commitment to what looks increasingly like an industry not ready for prime time.
Sales of electric vehicles were disappointing in 2011, with the Volt coming in below the 10,000 units forecast. In addition to its high price, the Volt brand is suffering from news that some of its batteries burst into flames after government road tests. Meanwhile, Fisker, the recipient of more than half a billion dollars in low-interest Energy Department loans, repeatedly delayed the introduction of its ballyhooed Karma — while repeatedly raising the sticker price. And now Fisker has announced a recall of the cars because of a potential defect in its batteries — made by A123 Systems, another large recipient of Energy Department support.
The Post recalls that Obama promised to have one million EVs on the road by 2015. So far, he’s about 980,000 short, despite spending billions in subsidies over the last three years as part of the so-called jobs stimulus package on early 2009. The Post notes that the high price and impracticality of EVs make such a figure a complete fantasy — and doesn’t even begin to address the problem that delivering on this promise would create, which is the production of electricity to meet the demand of the new vehicles. Thanks to the EPA, we are losing generating capacity, not gaining it, as they attack coal-based generation of electricity and the extraction of natural gas from shale through fracking. We’re subsidizing vehicles that only the wealthy can afford — and only the wealthy can afford the utter loss in value of these vehicles when their batteries require replacing, which creates all sorts of issues with disposal and toxic contamination in just a few years, too.
If we want to switch to a truly clean-burning power source both for mass production of electricity and power for personal transportation that the US can supply for itself, then let’s start planning a transition to natural gas, along with easing of regulatory obstacles to its extraction and production, along with the domestic oil production that will ease and fund the transition. We’re killing coal, gasoline, and electricity at the same time while demanding EVs that we won’t be able to economically buy or sell or even charge under current hostile regulatory policies. It’s not just one bad investment that we need to change, but a whole series of irrational policies that hamper American energy production and consumer choice. And that’s due to one bad investment in particular from which voters can divest themselves in November.