Since Reason TV asks the question, one can presume that the answer to almost any question asked that starts off “Should government …?” will be no — and they’re usually right. Let’s look at their new video on wind turbines and green energy in general with a different question in mind. Has government subsidies and mandates at the federal and state level done much to bring us closer to the Green Energy Promised Land? Or have regulation, mandates, and subsidies in renewables for decades actually hindered the process of innovation and production? Paul Feine and Alex Manning talk to two experts on either side of the question to get answers:
The point offered by enXco executive Mark Tholke is one often heard from green-energy activists, which is that oil and gas producers get subsidies, too. They do get tax breaks, although as this chart shows, the application of such “subsidies” is most efficient when applied to oil producers, in terms of actual energy generated:
Beyond the subsidies, though, the green energy industry benefits from mandates on the composition of electricity production. States like California mandate a certain percentage of power be derived from renewable resources. However, their regulatory regimes make it difficult to build such production facilities, and the lack of reliable output makes it even more difficult for producers to meet those mandates. As a result, power costs get driven upward, and consumers pay more for their energy — and for other goods and services, as energy costs are multiplied through distribution chains. Businesses have less money to invest, and fewer jobs get created.
The problem of innovation isn’t entirely cut-and-dried. Businesses invest in R&D for technologies with some hope of payoff, and most renewable energy efforts aren’t attractive to capital investors for that reason. The research in those fields might get slowed without some government subsidies to push it along. However, as economist Robert Michaels points out, most of the subsidies involved in green energy come on the commercial end, not in research. Government is trying to pick winners and losers with current technology. As the chart shows, government is picking the least efficient technology (by orders of magnitude) as winners. They’re deliberately hiding the price on the product in order to convince people that this energy is competitive, while taxpayers pick up the rest of the bill.
In doing so, they are preventing — or at least disincentivizing — the normal innovative processes that could unlock a real revolution in green technology. Wind and solar technology in their current form today cannot compete in the marketplace without heavy government intervention, and thanks to that intervention, wind and solar purveyors don’t have to innovate to make a profit. As long as that situation continues, we’ll still be waiting decades to “turn the corner” on mass production of renewable energy.