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More Regulations, More Renewables, More Economic Pain

Posted By Nicolas Loris On January 26, 2009 @ 5:36 pm In Energy | Comments Disabled

Fresh off receiving taxpayer money to stay afloat for a few more months and to submit a new business plan for economic sustainability, automakers now face a steeper hill to climb. President Obama has [1]

directed federal regulators on Monday to move swiftly on an application by California and 13 other states to set strict limits on greenhouse gases from cars and trucks. He also ordered the Transportation Department to begin drawing up rules imposing higher fuel-economy standards on cars and light trucks.

The president also directed the Transportation Department to draw up rules to implement a 2007 law requiring a 40 percent improvement in gas mileage for autos and light trucks by 2020. The Bush administration failed to write any regulations to enforce the new law.

Once the agencies act, automobile manufacturers will quickly have to retool to begin producing and selling cars and trucks that are cleaner and get better gas mileage on an accelerated schedule. The auto companies have lobbied hard against the regulations and have challenged them in court.”

Additionally, Obama is pressing to double America’s renewable energy production in three years [2]and has wholly supported the green sections [3]of the $825 billion stimulus package.

Increasing fuel efficiency standards for a struggling auto industry puts the cart before the horse and artificially restricts the market. In reality, fuel efficiency standards have very little environmental impact, and the standards raise the price of the vehicle while making cars and trucks lighter, and ultimately, less safe. Heritage senior policy analyst Ben Lieberman writes [4],

In theory, consumers can save at the pump by being made to switch to more efficient vehicles, and at the same time reduce greenhouse gas emissions and oil imports. But doing so will raise sticker prices, and the costs could more than negate the energy savings.

Beyond costs, in order to meet the tough new CAFE standard, cars and trucks will need to be lighter, which makes them less safe in collisions. A National Academy of Sciences study concluded that vehicle downsizing costs 1,300 to 2,600 lives per year.”

Secondly, investing in renewable energy will not stimulate the economy [3]; in fact, it could exacerbate the economic troubles we’re encountering. A recent report [5]by the Institute for Energy Research found that the increased cost of renewable energy will ultimately slow GDP and could result in jobs lost. Lieberman goes on to write [3],

Subsidies for wind and solar energy would, at least from the narrow perspective of the wind and solar industries, create new jobs as more of these systems are manufactured and installed. But the tax dollars needed to help pay for them cost jobs elsewhere, as would the pricey electricity they produce.”

Creating jobs and shifting jobs are two completely different things, as is creating wealth and transferring it. By borrowing money or taxing future generations, the government can only do the latter in both scenarios. The only other thing the government is doing by investing money in renewables is picking winners and losers among energy sources. Even after decades of special tax breaks, alternative energy still provides only a small fraction [6]of America’s energy needs. Continuing down this path will only result in more government control and more economic pain for American consumers – all for negligible environmental benefits.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/01/26/more-regulations-more-renewables-more-economic-pain/

URLs in this post:

[1] has : http://www.nytimes.com/2009/01/27/us/politics/27calif.html?_r=1&hp

[2] double America’s renewable energy production in three years : http://www.bloomberg.com/apps/news?

[3] green sections : http://www.heritage.org/Research/EnergyandEnvironment/wm2245.cfm

[4] writes: http://www.heritage.org/research/energyandenvironment/wm1721.cfm

[5] recent report : http://www.instituteforenergyresearch.org/2009/01/13/green-lantern-new-study-shines-bright-light-on-potential-harm-of-obamas-green-jobs-plan/

[6] alternative energy still provides only a small fraction : http://www.heritage.org/Research/EnergyandEnvironment/wm2004.cfm

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