‘Green Cronyism’ Has No Place in Energy Policy

COMMENTARY Renewable Energy

‘Green Cronyism’ Has No Place in Energy Policy

Jan 17, 2017 2 min read
COMMENTARY BY
Nicolas Loris

Former Deputy Director, Thomas A. Roe Institute

Nick is an economist who focused on energy, environmental, and regulatory issues as the Herbert and Joyce Morgan fellow.
An analysis by the Taxpayers Protection Alliance found that, from 2010 to 2015, Washington spent an average of $39 billion per year on renewable energy programs. iStock

Key Takeaways

For all the talk of a green energy revolution, conventional fuels are here to stay.

The shale revolution generated tremendous economic growth, created thousands of jobs and lowered the cost of doing business in America.

When left unencumbered by the feds and sensibly regulated by the states, free enterprise will deliver — without taxpayer-funded handouts.

Science magazine recently published a commentary from noted climatologist and “clean” energy expert Barack Obama. His considered opinion: the momentum of the green energy revolution is too strong for the Trump administration to reverse.

I know of no one who objects to green energy. But there is a serious problem with green cronyism.

Backing that cronyism is nonstop (and non-critical) cheerleading for the “revolution.” It’s been going on for decades. Fifteen years ago, The New York Times informed us that, due to “striking improvements in technology windmills, or wind turbines as the builders call them can now compete with fossil fuels in the cost of producing electricity.”

The same stories are being written today. And they’re still not true.

Consider last April’s Bloomberg article headlined “Wind and Solar Are Crushing Fossil Fuels.” Perhaps “crushing” is not quite le mot juste. Even with generous subsidies from federal and state governments, renewables provided only 10 percent of all energy consumed in the U.S. And wind and solar — the darlings of the green cheerleaders — accounted for only 4.7 percent and 0.6 percent, respectively, of U.S. electricity generation.

Petroleum, natural gas and coal, meanwhile, supplied more than 81 percent of total domestic energy consumed. These natural resources remain the dominant source of energy for America, and the rest of the world.

And, for all the talk of a green energy revolution, conventional fuels are here to stay. The federal Energy Information Administration, projects that, as far out as 2040 these natural resources will still account for more than three-quarters of U.S. energy consumption. If this is a revolution, it’s a glacially slow one.

Yes, the cost of renewables is falling, and that’s good. But make no mistake: What’s driving down cost is competition, which has spurred technological advances and innovation. This is not a story of how government handouts helped an infant industry grow. Wind and solar have been subsidized for decades. Only now are we beginning to see the costs come down.

But let’s assume the proponents of renewables are right this time around and that wind and solar are now cost-competitive with other sources of energy. What better time, then, to get rid of the green cronyism? Why not end preferential treatment from the federal government and save tens of billions of dollars in handouts?

Renewable energy subsidies — ranging from grants and government-backed loans to targeted tax credits and outright mandates — have been around for decades. The Obama administration put them on steroids. An analysis by the Taxpayers Protection Alliance found that, from 2010 to 2015, Washington spent an average of $39 billion per year on renewable energy programs.

A few years ago, the Government Accountability Office compiled a list of all the federal initiatives trying to boost renewable power. Maybe you’d expect the final tally to be a dozen or so programs. Try 345. For solar power alone. In total, GAO identified 679 renewable-related initiatives spanning across 23 different agencies for Fiscal Year 2010.

Not only do these policies play favorites with public money, they also direct private investment away from other, potentially more promising endeavors.

Importantly, dependence on Washington removes the incentive to become cost-competitive without the preferential treatment, obstructing the long-term economic viability of alternative energy technologies. Eliminating favoritism for all energy sources will embolden the market to drive energy innovation.

America witnessed an energy revolution over the last eight years. But it wasn’t a green one, and it wasn’t driven by the federal government.

The shale revolution generated tremendous economic growth, created thousands of jobs and lowered the cost of doing business in — and living in — America. And that occurred despite the Obama administration’s efforts to tamp down the development of our natural resources.

The oil and gas revolution — a rapid and huge success despite government obstructionism — suggests a valuable framework for future energy policy. When left unencumbered by the feds and sensibly regulated by the states, free enterprise will deliver — without taxpayer-funded handouts. That’s a revolution worth getting behind.

This piece originally appeared in The Washington Times.