Taxpayers Must Beware ‘Value’ of Supporting Renewable Development with Government Funds

GAIN’s position on government intervention, be it through production cuts and quotas or bailouts and subsidies, is that the free market – particularly when it comes to energy – is the ultimate arbiter to best serve consumers in domestic and international markets.

Nevertheless, administrations and agencies continually weigh the merits of alleviating temporary industry pains that are abundant right now. According to E&E News, up to 56% of Americans support bailing out the clean energy industry. The article continues on to discuss difficulties characterizing a ‘bailout’ for the American electorate and politicians themselves. At this point, ‘bailout’ seems to be more a partisan tool to describe opponent spending than a concrete set of government measures.

Before others join in clamoring to pour money into renewable companies and give the government a green light to assess and predict the companies of the future, Americans must consider:

The last large scale cash injection for energy companies from the government came under the Obama Administration as ‘green loan guarantees’ that focused on dozens of companies believed to be on the cutting edge of renewable energy technologies. Perhaps the most infamous recipient was Solyndra, which quickly defaulted on a $535 million government loan after going bust.

Since the rollout of these loans, taxpayers are picking up the pieces of the program at a cost of $2.2 billion with little progress made by companies that received these loans. This goes to show that when the government gets in the business of picking winners and losers, it seems to miss more than hit.

Second, taxpayers must be diligent in assessing the ‘value’ or benefit they receive from the deployment of taxes by the federal government. Should the 56% get their way and a bailout of the clean energy industry be deployed it would do little to better the large picture and, instead, may simply speak to the ‘warm – glow effect,’ or emotional satisfaction consumers and voters receive from supporting policies they deem to “do good.”

In reality, renewables and ‘clean energy’ are still cutting their teeth in efficient energy generation. The Energy Information Administration found renewables to be the tertiary contributor to the nation’s electricity, behind a number of fossil fuels and nuclear plants.

This should be a reminder to the survey’s responders that on paper and in practice are two very different things. Fortunately, the United States benefits from a long history of investing in energy infrastructure, leading the research and development of new energy innovations, and a wide breadth of natural resources that have brought us energy security. Bailouts and energy market interventions are best reserved for paper, not practice.

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