Era of energy subsidies is over

Bill Clinton famously said, “The era of big government is over.” Well, it didn’t work out that way. But something truly remarkable is happening in our national conversation about energy subsidies: outrage, mounting opposition and, we hope, a swift end. This would be great news for taxpayers and consumers. Subsidy folly has been bipartisan and commonplace. For the past three decades, both parties have intervened in the energy industry. In 1978, a Democrat-controlled Congress and President Carter created an investment tax credit for solar, wind and other renewable energy sources. In 1992, a Democrat-controlled Congress and Republican President George H.W. Bush passed the production tax credit for electricity produced from wind and biomass. Then in 2005, a Republican-controlled Congress and President George W. Bush passed the Energy Policy Act of 2005, which included massive tax subsidies for seemingly every energy source under the sun, including alternative vehicles, advanced nuclear power and, of course, solar power. The latter legislation created the infamous Department of Energy loan-guarantee programs that produced the ongoing Solyndra scandal. After three decades, what have we learned? c Energy subsidies distort the free market by funneling billions in taxpayer dollars to politically favored energy sources and technologies, preventing market prices from signaling the optimal source for particular energy uses. c Subsidizing energy sectors drains the federal treasury and forces the consumption of higher-cost energy sources. c Politically allocated capital typically flows to politically connected companies or to large companies that could develop innovative technologies on their own dime. The $535 million Solyndra scandal has reinforced all of these lessons and helped shine a light on the energy-subsidy debate, exposing those who maintain government is the solution to our energy needs. The good news is that with the support of the American people, politicians now are speaking the truth...more