President Obama recently visited a factory in Newton, Iowa, that builds wind-turbine blades, contrasting the industry of the past — Maytag left the town in 2007 — with a vision of a future with middle-class green manufacturing jobs. Who could be against that?
One problem: According to Mr. Obama, that future apparently requires a clumsy array of expensive federal subsidies. The wind production tax credit (PTC) devotes more than $1 billion a year to support wind-power projects, rewarding them for every kilowatt-hour of electricity they generate, not for providing electricity inexpensively or devising cheaper ways to operate. But the president has nevertheless put reauthorizing the tax credit, which expires at year’s end, on his “to-do list” for Congress. In Newton, Mr. Obama pointed to the progress in renewable energy sources; their use has nearly doubled since 2008. The government, he argued, should not imperil such progress by cutting off the subsidy spigot.
More clean energy is good. Achieving it with crude policy is not. Maybe wind power really is the future, or maybe it’s not. There are policies designed to allow consumers and utilities to decide, instead of Congress, and the best among them is a carbon tax. Instead, politics have led lawmakers to place hidden costs on taxpayers through subsidies such as the PTC, just one of scores of federal clean-technology programs.
It’s widely assumed that a carbon tax could not pass Congress, so green-minded policymakers are defending what they have. But if political reality demands that Congress stick with subsidies, there are better ways to approach them. A report in April from the Breakthrough Institute, the Brookings Institution and the World Resources Institute offered plenty of ways to design subsidies that encourage less expensive renewables. Subsidy levels could decline over time, they could be set in an auction or they could be determined by the cheapest players in the market, stimulating improvement.
The choice is not between rote reauthorization of the PTC and dismantling federal green-energy support. If subsidies really are the only anti-carbon policy that lawmakers, in their bravery, can approve right now, then they should at least make them a little more rational. That might even be worthy of a presidential stump speech.
Too often, Democrats blast Republicans for ignoring the necessity of using cleaner energy, and Republicans blast Democrats for ignoring the necessity of husbanding national resources instead of spending freely on nice-sounding programs. Each point is incomplete without the other. America must move with ambition toward clean energy — but with minimum disruption to the economy and the federal budget.
The Washington Post (June 4)