Green Energy Subsidies Are Hurting Green Energy
The worst part about government subsidies for emerging technologies like the nascent wind and solar power industries may not be the propensity for crony capitalism, with political connections driving the “investments”, but rather what subsidies do to distort the markets.
That’s the point David Bergeron, president and founder of solar-powered refrigerator company Sundanzer, makes in this piece about solar power subsidies. When companies get subsidies, their priorities shift to maintaining their subsidies as opposed to finding a way to improve their technology so that it can sell on the market without subsidies (via Mark Perry):
Here is the real problem: Subsidies make solar appear viable today, so where is the motivation for an entrepreneur to risk money, or even focus on developing real energy alternatives when solar is “almost” there? How can an inventor justify striving with the effort it takes to really develop something great when he is competing against a straw man technology which can provide power at almost the same cost of traditional power sources today? But of course it really doesn’t.
The answer is he can’t justify the effort, so the next great thing is not developing, at least not with the sense of urgency it should be. Why enter a contest when you are competing against someone with an unfair advantage? You may be the faster swimmer, but your competitor is using flippers.
Solar subsidies are a placebo which is giving the general public a sense of security about our energy future and is robbing the motivation of those entrepreneurs that could actually address our energy problems. Subsidies are much worse that just wasteful, they’re diabolical. They lull us into thinking we have almost solved the problem and they hinder us from seeking the real solutions.
The problem with government subsidies is that the projects that need government subsidies aren’t ready for the market, and those that don’t need subsidies shouldn’t get them at all.
These subsidies do more harm than good. They’re a waste of money, and they hold innovation and invention back.Tags: free market, green energy, subsidies