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  • The No Subsidies Energy Policy

    Wind generators

    Global Environment Fund founder and chief executive Jeffrey Leonard (not 1987 National League Championship Series MVP Jeffrey Leonard) wrote in The Washington Post last week:

    If Obama wants to set us on a path to a sustainable-energy future – and a green one, too – he should propose a very simple solution to the current mess: eliminate all energy subsidies. Yes, all of them – oil, coal, gas, nuclear, ethanol, and wind and solar.

    This is a fabulous idea which we genuinely hope President Obama adopts. Subsidies distort market signals creating complacency and reducing the incentive to innovate. Despite decades of subsidies, alternative energies such as wind and solar power contribute only 1% of our nation’s energy needs. Subsidies for clean coal, oil, nuclear, and natural gas are no different. Energy industries should be freed from all government subsidies.

    But conservatives should be on guard because not all energy subsidies come in the form of loopholes, payments, and loan guarantees. Mandates, like the existing ethanol mandate, or the proposed Renewable Electricity Standards are also subsidies. Indeed, later in his op-ed Leonard writes:

    Eventually, when the political climate is right, it should impose some form of tariff on carbon and other greenhouse-gas emissions to ensure that the market internalizes the global “costs” of threats to the planet’s life-giving atmosphere.

    Cap and trade, or any substitute carbon tax would be a huge and harmful government intervention into the energy sector and should be avoided at all costs. But Leonard does write:

    Is eliminating all energy subsidies politically possible? There have always been libertarian elements in the Republican Party that have railed against “corporate welfare,” including the massive tax expenditures that favor oil production. Now they are joined by many Tea Party sympathizers who, appalled by the bailouts of the big banks and automakers, instinctively share the same hostility toward subsidies of big business.

    So we find ourselves in a political moment when for the first time it is possible to imagine an alliance of GOP libertarians, disaffected environmentalists and budget hawks coming together for a grand deal that would sweep away 60 years of bad energy policy. In the spirit of bipartisanship, Obama should seize the opportunity.

    Let’s hope President Obama does.

    Posted in Energy [slideshow_deploy]

    21 Responses to The No Subsidies Energy Policy

    1. Bobbie says:

      That's right Mr. President! What a simple solution not even the greatest of intelligence thought of! Very anxious to hear your retort!

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    6. EJJ, Fort Worth, Tex says:

      Yes, absolutely….end the subsidies! However, do it gradually. Keep in place incentives for energy independence – implement additional incentives like tax free purchases of equipment made in the USA by corporations, eliminate capital gains taxes and corporate taxes for renewable energy companies.

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    8. Bob the Builder, Sev says:

      While we are simplifying energy policy by eliminating subsidies, we should not leave out the moratoriums on off shore drilling and drilling on Federal lands for both oil and natural gas, including ANWR. If we removed subsidies we should also remove unwarranted impediments to supply creation as well. This would otherwise impose a huge obstacle and unfair disadvantage to the oil and gas industry, particularly since the miserable handling of the Gulf Oil Spill and its knee jerk over reacting aftermath.

      Next question is what to do about ARPA-E and DARPA funding relating to energy? We should not eliminate all R&D in the energy sector, just do it without bias to any particular technology if that is possible. No picking of winners and losers. We must compete globally and are losing any edge we had sitting on our hands, like in the nuclear energy area, while Russia, France, China and others are forging ahead.

      If all this comes to pass, does this mean we can eventually eliminate DOE all together? Since there only stated mission in life was to remove dependency on foreign oil. Just handle the nukes through a streamlined NRC or a derivative separately in conjunction with the military . Savings: $26B/yr.

    9. Evan, Anchorage says:

      I agree with no subsidies for anything. Start with farm subsidies and keep right on going down the line

    10. CAdli,NV. says:

      Should there be no;Subsidy;There will be no votes for those in :Power:from subsidied.

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    12. Scott Carver says:

      Why stop at energy subsidies? I firmly believe that we should stop all subsidies. Let the supply dictate the price, and people will pay what the market calls for.

      Why would someone suggest this? Because subsidies are just the government's way of dictating what is produced. Don't want someone to produce something, subsidise what you want him to produce and make it more profitable. Or even better, simply pay him not to produce anything. (i.e. subsidies to farmers to leave fields unplanted). The government needs to get out of the market, and allow supply and demand to dictate what is grown, produced, and created. No other type of market will bring America back from the brink it currently sits on.

      The Free Market system has been around forever, BECAUSE IT WORKS. Lose the Free Market, and we lose, period.

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    14. Tom Davidson, Richmo says:

      But without subsidies where are the corporations going to get the cash needed to obtain cooperation from bureaucrats? We can't expect the government to funnel megabucks DIRECTLY to their own functionaries, now can we?

    15. cprforamerica, NC says:

      Wholeheartedly agree with Mr. Carver. It is time to let the markets work the way they are suppose to. It is time to stop the subsidies and let the playing field be level.

    16. Tom Sullivan in FL says:

      We'll stop all subsidies after the government goes broke and the economy collapses in a depression.

    17. Spiritof76, NH says:

      I agree with removing all subsidies-everyone of them, including TARP, bailouts, Fannie and Freddie, GM etc. etc. In energy, defund EPA and the Dept. of Energy. Stop the hoax about carbon di oxide. Those that think that CO2 is a harmful polluant can stop breathing. It is the most ridiculous, ill-founded and power-grabbing device thought of by the socialist elites.

    18. Schmuki says:

      Recall it was alternative energy subsidies that allowed numerous US startup companies to develop leading technologies in the 70s. These same companies were purchased by foreign entities when Reagan pulled those subsidies and now, these same companies are world leaders–born in the US but now foreign owned and operated. How short our memories are……

    19. William Ernest Schen says:

      Have to decide what result is desired. Estimated natural gas resource is 20,000 trillion cubic feet. This is sufficient to nearly double atmospheric CO2 all by itself. This energy source will remain competitive in CCGT power plants no matter what happens. Existing coal and oil fuels will remain competitive.

      If perchance a zero carbon energy source happens, demand for coal, oil and natural gas will decrease and their prices will drop. In the 1998 race to the bottom, oil hit 10 USD/barrel and natual gas hit 1.5 USD/Mcf. This happened because a large number of coal and nuclear plants came online. Minus making coal, oil and natural gas illegal worldwide, atomic power has to be subsidized to whatever extent required to chase fossil fuel consumption down. This is not a simple problem

    20. Edward, AZ says:

      Yes this is a great idea. We should also be sure this subsidy list includes the ability to pollute free of charge. Energy sources (particularly fossil fuels) are under-priced by the market since they don't have to pay their true cost of production — which should include external costs like acid rain, mercury, water pollution, ozone, soot, and carbon dioxide. The rest of us taxpayers pay those costs later in hospital bills, fewer natural resources, treatment facilities, and so on.

    21. Byron Rode, Lake Cry says:

      Shall we put a percentage to the war effort in the Persian Gulf area that goes to protecting our imported oil? Then consider putting a value on the lives lost defending our interests. When adding all the subsidies up, tax incentives for oil companies, military costs, etc, etc, you will find subsidies no less than $1.20 per gallon up to infinity per gallon because you can't put a value on life. Who has been subsidized the longest- probably oil! Do we pull the troops out of the Gulf areas? If not ( and I'm not saying we should) why take away other energy subsidies? What is the price of security here in America or doesn't that matter any more?

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