The Washington Post's Charles Lane has a column today in which he argues that the Obama administration's efforts to bolster clean energy is money "wasted," and that if government does "double down on clean energy, it’s the federal budget that will end up busted."
Lane bases his arguments largely on a report released earlier this month by Brookings. "Clean Energy: Revisiting the Challenges of Industrial Policy" assesses the value of subsidies in bolstering a clean energy economy.
What Brookings found probably won't come as much of a surprise: Subsidizing clean energy initiatives is not always effective and is not the ideal way to bolster the sector. Instead of subsidies, the most market-efficient way to support clean energy is to internalize the costs of fossil fuel-based energy production. In other words, to build a system that -- among other things -- ends the ability of coal power producers to emit carbon dioxide and other pollutants into the atmosphere where they will produce long-term costs in global warming and negative health impacts.
We tried this one way; it was called cap-and-trade. It was proposed by Republicans, then killed when Democrats began to champion it. Politically, it's a non-starter.
There's another way to do it: regulation. The EPA has issued several rules that would lower the allowable baseline for fossil fuel pollution. This is the sort of reception such efforts receive.
Which is why the fossil fuel industry and its allies focus on subsidies as a target. Subsidies are the primary support the government provides to clean energy. If you remove subsidies for clean energy projects, it's almost impossible for them to get a foothold in a crowded marketplace -- even if, over the long run, the technology will obviously be dominant and more cost-effective. If you came up with a new retail system, one that held real promise to vastly improve the consumer experience, how do you think you'd do if Walmart wanted to take you out?