Eliminating subsidies would mean all subsidies, from tax breaks to credits to easy loans, of all possible energy sources: coal, oil, gas, ethanol, nuclear, “green.”
Shouldn’t we at least do the experiment, to actually see what would happen to energy markets, which have never been “free”? The main hitch is that it couldn’t exactly be called a level playing field if every subsidy were instantly eliminated. Decades of government support of fossil fuels have helped create vast infrastructure that would help them maintain their edge for years to come.
Ethanol would have an edge too, though not as long-lasting as that of fossil fuels. Agricultural subsidies in general should be eliminated because they have been warped from what was originally a reasonable safety net for small farms that involved only loans (not outright payments), to a massive windfall for giant agribusiness dripping with pork fat and costing us untold health care dollars as well. But on top of that, U.S. subsidies for ethanol have raised world food prices, arguably have overall released more CO2 than suppressed, and are disingenuous because the energy gain from corn ethanol production is much lower than with other potential biofuels. Finally, they are also likely to undermine a beneficial conservation program.
Most subsidies in any industry are simply giveaways to powerful buddies of senators, back-rationalized for how they benefit us but which actually have nothing to do with making the world a better place. Occasionally, “green” energy has gotten a nod, for example from former President Carter, only to have those subsidies eliminated once those beholden to fossil-fuel industry fat cats were back in power.
Those pushing development of “green” technology have argued for changing the subsidies, by imposing “cap and trade” for carbon and giving subsidies to the greens. As Tom Friedman repeatedly has pointed out, reducing our reliance on oil in particular is a win-win-win for its foreign policy advantages, potential to preserve the ecology of our planet, and show the world that America can once again be a leader and benefit from the economics of a new important industry, instead of staying behind the curve of public opinion due to entrenched interests that care nothing for our nation’s future.
This is a compelling argument. Given where we are at with climate change, in an ideal world we should not waste time experimenting with a free energy market, when it is well established that pumping CO2 into the atmosphere at the current rate creates long term environmental change, most of which we will find not to be beneficial (even from a purely anthropogenic standpoint). Cap and trade would be by far the best policy to have in place for mitigating potential disaster using a market model – unlike any subsidy program.
But it would show the least hypocrisy to advocate dropping all energy subsidies now, even if that is not the ideal from one political position – which of course would be the point: if we eliminate all subsidies, everybody loses, so it would be the least politically motivated proposal.
We should begin the experiment, and give it a few years. Oil’s advantage will slip as oil prices rise due to exponentially increasing demand and rapidly dwindling supply. Coal would still have to be produced under current EPA rules and other environmental protection laws, because eliminating subsidies does not mean the government relinquishes its necessary duty to protect its citizens from toxins. It does mean that taxpayers no longer subsidize the permanent loss of other land functions and water use associated with high-impact mining. (That’s a big subsidy that’s of course ignored by industry insiders.)
How about it? People across the ideological spectrum have begun calling for the elimination of all subsidies. Anyone trying to defend their own pork would be exposed as hypocrites, and on balance, it would probably be better for the environment than the status quo. If all the populists out there really want government to serve the people, this is an obvious policy to lobby for.