Economics, Energy and the Environment

Energy Fact of the Week: Public souring on energy subsidies

As Gomer Pyle used to say to Sargent Carter: Surprise, surprise, surprise!—in the wake of the still-unfolding Solyndra scandal, public support for government spending on alternative energy is ebbing pretty fast. The Pew Research Center came out with a new survey last week showing public support for government funding of renewable energy to be sliding sharply. The chart below from the Pew report shows that overall public support for alternative energy subsidies has fallen from 82 to 68 percent. That’s still a pretty large majority in favor of this nonsense, but the right hand cross-tab that shows the trend by partisan breakdown is more interesting, as it shows that among Republicans support for government energy subsidies has fallen by 30 percent, while support among Democrats is virtually unchanged. In other words, virtually the entire decline in public support came from Republicans. When sharply partisan divisions over an issue start to open up like this, it’s usually a formula for policy gridlock.

All of this is starting to have an effect on the media, which is showing signs of turning to a different narrative on energy—a narrative more skeptical of the whole renewable energy domain. Exhibit 1 is the lead story on green energy in the New York Times last Saturday. The print hed and sub-hed told it better than the online version: “Rich Subsidies Powering Solar and Wind Projects: Big Rise in Government Aid—Companies Are Virtually Assured of Profits.” It’s worth reading the whole thing to soak in the outrageous scene, but this paragraph gives a worthy summary:

The government support—which includes loan guarantees, cash grants, and contracts that require electric customers to pay higher rates—largely eliminated the risk to the private investors and almost guaranteed them large profits for years to come. The beneficiaries include financial firms like Goldman Sachs and Morgan Stanley, conglomerates like General Electric, utilities like Exelon and NRG—even Google.

This “banquet of government subsidies,” as the Times describes the “cornucopia” of federal largesse, sounds like another fillip to the 1 percent doesn’t it? And don’t forget a key phrase here—“contracts that require electric customers to pay higher rates”—which means we get it at both ends: we shell out tax money for the subsidies, and then have to pay higher utility rates, all to ensure that energy companies get a “guaranteed” profit.

Then the very next day Steven Mufson of the Washington Post filed a very tough story entitled “Before Solyndra, a long history of failed government energy projects”:

Solyndra, the solar-panel maker that received more than half a billion dollars in federal loans from the Obama administration only to go bankrupt this fall, isn’t the first dud for U.S. government officials trying to play venture capitalist in the energy industry.

The Clinch River Breeder Reactor. The Synthetic Fuels Corporation. The hydrogen car. Clean coal. These are but a few examples spanning several decades—a graveyard of costly and failed projects.

Not a single one of these much-ballyhooed initiatives is producing or saving a drop or a watt or a whiff of energy, but they have managed to burn through far more taxpayer money than the ill-fated Solyndra. An Energy Department report in 2008 estimated that the federal government had spent $172 billion since 1961 on basic research and the development of advanced energy technologies.

What does Washington have to show for these investments? And should the government even be in the business of promoting particular energy technologies?

Finally we’re starting to ask the right questions.

2 thoughts on “Energy Fact of the Week: Public souring on energy subsidies

  1. A recent poll found that 9 out of 10 Americans support the use and development of solar energy, across the political spectrum. It’s simply irresponsible to label to a reliable, robust, emissions-free energy resource as ‘nonsense.’

    Greater solar and other renewable energy deployment will help the U.S. achieve energy independence and security — and protect the health of the planet and generations to come.

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