« BACK  |  PRINT

RS

MEMBER DIARY

The way the government should be investing in alternative energy

Beyond subsidies and guaranteed market share

By: Next93 (Diary)  |  August 28th, 2008 at 02:27 PM  | 

RESIZE: AAA

So far, government attempts at making alternative enery happen have been uniformly disasterous. They either give direct subsidies or create mandated government markets (such as Governor Rhino of Minnesota passing a law that dictates the amount of green energy that the state utilities will provide). Neither of these approaches result in actual “alternatives” but rather higher costs for everyone. What’s worse, they take money from the entire population to enrich those who are in that particular industry; we share the risks and costs but not the rewards.

The simple fact is that if these technologies have any technical merit and can become cost competitive, they’ll be huge commercial successes, and they won’t need the subsidies or guaranteed market shares.

Of course, the liberal response to this is that we need to “prime the pump”. Again, I think this is a stupid argument; no one needed to prime the pump to make the automobile a success, or the personal computer, or the internet (aside from a small DARPA grant that, yes, Al Gore had a part in awarding). But, ok, maybe some times we need to help incubate an embryonic industry.

So how about this for an approach: eliminate the capital gains tax for investments in companies that are doing the basic R and D on alternative fuels. If the companies fail, they fail on thier own, the government’s not out a penny, and the only people who get hurt are the ones who voluntarily took the risk. If they fly, the government’s STILL not out a penny, the people who took the risk reap a larger reward, and the entire economy benefits

Tags: , , ,
Get Alerts

COMMENTS

POSTING RULES  |  LOGIN TO COMMENT  |  REGISTER TODAY
  • kyle8

    Get rid of ALL subsidies, get rid of all Cafe standards, get rid of all the redundant controls on drilling, refining, and on nuclear power.

    Cut all taxes
    Cut the payroll tax, eliminate it.

    Replace the lost revenue (some would not be lost because the economy would take off) with excise taxes on fossil fuels.

    That way you shift taxes from income to consumption, which is more efficient, and you give a boost to both conservation and alternatives.

    I know, libertarian pipe dream.

  • ChanceHaywood

    As someone who has always embraced his libertarian soul it has forever bothered me that my party seems intent to put forth half ass attempts at being the better party.

  • Flagstaff

    the bigger picture, even when being on the right track.

    No government subsidies for “alternative” technologies? Right on. But eliminate the CG tax for only them? That is again giving them a back-door subsidy. Just reduce or eliminate all CG taxes and reduce the corporate income tax.

    And Kyle–Get rid of those taxes and controls? OK. But no excise taxes on fossil fuels. Fossil fuels are the most EFFICIENT fuel available. That means they are the LEAST EXPENSIVE PER UNIT OF WORK PRODUCED. Why penalize that source just because some people don’t like it?

    If you like the idea of a consumption tax, tax ALL energy sinks according to the amount of work produced. That will encourage conservation of total energy, and also encourage research to make “alternative” energy more efficient, without unfairly penalizing the best and most abundant energy resource we have.

    Incidentally, there are tons of taxes on fossil fuels already. The fact that they are still cost efficient is positive proof that they are our best energy source right now.

    And, if we produce from our OWN resources, the financial benefits of all that production accrues to US, not to our current secondary suppliers.

  • zsmvf6

    Actually, nuclear will be cheaper than coal in the long run, mostly due to transportation costs and the amount of fuel burned.

    The primary difference between nuclear and coal is that nuclear involves a lot of money upfront and coal requires a lot of money over a period of years (for the fuel, obviously). As long as the green nutjobs continue their delaying/stalling tactics in the licensing review process, investors will be leery to throw money at something that could never be built.

    In addition, the utilities have been paying a spent fuel fee (can’t remember the exact amount) to the government with the understanding that Yucca Mountain would be provided to store it. The money, however, is being used for general Treasury purposes and not its original intent (2 words: Social Security). Thanks also to those idiot greens and Harry Reid, the project is costing more than originally projected (cost is now 90 billion?) and it may not open, even though it is the perfect place. The utilities are basically suing the government and winning over this issue.

    Flagstaff, you’re right in the fact that fossils are our option right now. Let’s use what we got!

    • Next93

      I don’t know that I’ve ever made penny in capital gains, so the tax doesn’t effect me directly, but I’m no fan of capital gains taxes. I happen to like working in high-tech industries and the nice people who invest in them have, on more than one occasion, paid my salary. Plus,I have a fond dream of some day having enough money invested that CG will become my primary source of income.

      That being said, I think lifting CG on alternative fuels research would (a) be a great way to back-door lifting CG on other types of investments, and (b) in the short run make alternative fuels research more attractive as an investment by skewing the risk/benefit ratio (it compensates for the low probability of a payoff by increasing the size of the payout).

      • Flagstaff

        My perspective is simply different.

        I believe that as the cost of fossil fuels goes up, the incentive for investment in alternative fuel research also goes up, all without any special government intervention that might easily promote the wrong alternative. Let the market decide, and we won’t be stuck with green light from government-mandated CFL bulbs making it difficult to read the handwriting on the wall.

        For this approach to be effective, however, the government also has to release or loosen some of the restrictions that hamper us in the use of the fuels that we have now, fuels that are abundant and available here if we allow them to be extracted. If we do that, there will be no need for a breakneck dash to quit the use of oil. It will remain available and affordable long enough to get the transition right, without government intervention.

        • gamecock

          5

          • Next93

            The state of Minnesota actually has a law on the books banning construction of new nucleaer plants. That’s in ADDITION to the law that Governor Squishy signed that dictates the proportions of “green” energy they’ll provide over the next decade.

            I wonder how many other states have similar laws, and how long they’ll last when the voters discover this winter that they can’t afford to pay the electric bill anymore.