If you were to ask a proponent of wind energy or solar energy or fairie-powered bicycle energy whether public subsidy of those industries was necessary, correct and relevant, I am pretty confident you’d hear a “yes.” I’d be really curious to see a rundown of the common reasons WHY those positions would be justifiable. Would folks point to some increasing-returns-to-scale technology that is unique to those energy sources but not a problem with others? Would they argue that there are inadequate incentives to do research on those technologies because of an inability to capture future benefits from development? Would they simply just argue that if something is “good” then it must be subsidized?
No reason to analyze any of these for today’s post – there is plenty of time for that. I just think that there is another good litmus test to ask folks who like “green” technology why they think there should be any government role for it. And what test is that?
Ask them to imagine a yet unnamed alternative energy that can reduce CO2 emissions, can reduce NOX and SOX and particulate pollution, that can lower the price of energy (a particular boon to the poor), that may have some unintended side effects, that probably requires a massive coordinated effort to roll out infrastructure to support it, and that has resulted from dozens of years of research from universities, private companies and governments around the world. Would they support subsidy of such an alternative?
Tell them that hydraulic fractured natural gas is exactly the energy source you are talking about and ask them what is different. Or maybe put it another way, just ask the question, “could you envision a scenario where we’d want to subsidize coal and oil?” I suspect you know the answer you’ll get, and I suspect it’s easy to understand why folks hold particular views they do.