Politicians Can’t Get Enough Energy Cronyism

  • Date: 17/08/17
  • Veronique de Rugy, Reason

From solar to coal, politicians love to subsidize power production

Despite the breadth of the current political divide, it appears that there is at least one thing that all politicians can agree upon: energy sector cronyism. The only real dispute is over the preferred beneficiaries.

Under President Barack Obama, green energy subsidies were given out like candy. The failure of solar panel company Solyndra is well-known, but the problem extends well beyond the shady loan deal and its half-billion-dollar cost to taxpayers.

Between 2010 and 2013, federal subsidies for solar energy alone increased by about 500 percent, from $1.1 billion to $5.3 billion (according to the U.S. Energy Information Administration), and all federal renewable energy subsidies grew from $8.6 billion to $13.2 billion over the same period. Congressional Budget Office testimony before Congress further reported that 59 percent, an estimated $10.9 billion, of energy-related tax preferences in 2016 went to renewables.

Subsidies have come down from their 2013 peak, thanks to the expiration of some of the post-financial crisis “stimulus” programs, but so-called green energy—solar in particular—still receives vastly higher subsidies on a per- kilowatt-hour basis. However, that didn’t stop the largest U.S. solar panel manufacturer, SolarWorld, from filing for bankruptcy earlier this year despite $115 million in federal and state grants and tax subsidies since 2012, along with $91 million in federal loan guarantees.

SolarWorld and fellow bankrupt manufacturer Suniva are now begging for even more government assistance, in the form of a 40-cent-per-watt tariff on solar imports and a minimum price of 78 cents (including the 40-cent tariff) a watt on solar panels made by foreign manufacturers. Without that help, a Suniva executive argued, the company would “go extinct.” So basically, these companies can’t compete despite all of the taxpayer dollars they’ve received and have petitioned the United States International Trade Commission to further punish consumers on their behalf by banning them from buying cheaper and higher-quality panels abroad.

Green energy companies aren’t the only ones who think that the Trump administration will be receptive to handout requests. Shortly after West Virginia Gov. Jim Justice used a recent Trump rally to announce that he would be switching from the Democratic Party to the Republican Party, he began negotiating the price for his defection. Namely, he wants federal tax dollars thrown at the Appalachian coal industry, which is losing market share to cheaper energy sources, such as natural gas.

Gov. Justice ambitiously hopes that utilities will rake in $15 in federal subsidies for every ton of Appalachian coal burned. He’d be on much more solid ground if he simply demanded an end to subsidies for coal’s green energy competitors. But in the world of politics, saving taxpayer dollars—as opposed to giving handouts to corporations and preferred industries—is never the chosen path.

Full post



We use cookies to help give you the best experience on our website. By continuing without changing your cookie settings, we assume you agree to this. Please read our privacy policy to find out more.