Now that renewables are receiving some of the same incentives that fossil fuels have enjoyed for nearly one hundred years, we’re suddenly being inundated with calls for a purely “free-market” approach to energy development from politicians on the right and companies concerned about the growth of clean energy.
Their arguments make for good sound bites. But if we take a look at the history of energy development in the U.S., it’s very clear that we’ve never had a truly “free” market. In fact, all of the technologies that dominate our energy system today were given special incentives by the government in order to get them to commercial scale.
According to a recent report from the venture capital firm DBL Investors, the U.S. coal, oil, gas, and nuclear industries have cumulatively taken in more than $630 billion in tax credits, land grants, R&D programs, and direct investments from the government. That far surpasses the roughly $50 billion in government renewable energy investments (wind, solar PV, solar thermal, geothermal, biofuels) through these same mechanisms over the decades, according to the report.
But when renewable energy is given similar incentives — helping double the penetration of non-hydro renewable electricity since 2008 — the energy free-marketeers come out of hiding and lament how we’re supposedly “picking winners and losers.”
The Republican party’s platform released this week is a perfect example:
Unlike the current Administration, we will not pick winners and losers in the energy market-place. Instead, we will let the free market and the public’s preferences determine the industry out-comes. In assessing the various sources of potential energy, Republicans advocate an all-of-the-above diversified approach, taking advantage of all our American God-given resources. That is the best way to advance North American energy independence.
Sounds pretty straightforward. However, the RNC’s platform is very bullish on maintaining use of coal, a resource that is declining in the U.S. because of … current market forces.
According to the Energy Information Administration, we’ve seen a 20 percent drop in coal generation over the last year. That decline has been “primarily driven by the increasing relative cost advantages of natural gas over coal for power generation in some regions,” wrote EIA.
But when market forces move in the wrong direction for coal supporters, that is apparently when it’s okay for government to intervene. According to the RNC’s platform, the party wants to use the strength of government to “encourage the increased safe development in all regions of the nation’s coal resources.”
So there you have it. When the government encourages renewable energy, that’s called picking winners and losers. But when the government encourages coal — an increasingly-expensive resource that has become an environmental nightmare — that’s “the best way to advance North American energy independence.”
And the picture becomes even more complicated when looking at the forces behind the boom in gas production. In fact, the fracking technologies people love to hold up as a miracle of the free market were made possible through years of government investment.