Should government subsidize renewable energy sources such as wind, solar and ethanol?

No

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by Shannon Courtney

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Renewable energy alternatives such as solar panels, wind turbines and ethanol provide consumers, communities and countries with a viable way to reduce greenhouse gas emissions and dependence on non-renewable resources, particularly oil. At the same time, investing in renewable energy solutions could create an economic boom, as private enterprises are jumping onboard the 'green' wagon in a race to create the best renewable energy technologies at the lowest prices. It seems, then, that the free market alone should suffice in creating conditions that allow the best producers of alternative energy solutions to compete on a fair and level playing field with their long-standing competitors in the oil industry. Alas, this is not the case. At present, governments in the US, Canada and Britain (amongst many) subsidize the oil industry to the extent that it is extremely difficult for private enterprises engaged in R&D and product launches of new, unfamiliar energy alternatives to compete fairly.

Consumers are, in effect, not receiving a clear indication of the true costs of oil energy versus the emerging alternative energy solutions that are just coming to market. Further to subsidizing the oil industry, many governments make it even more challenging for consumers to invest in renewable energy solutions by slapping on taxes and allowing insurance companies to gauge homeowners who invest in wind or solar energy. It is a sad state of affairs when governments continue to subsidize an industry that is clearly contributing to the climate change issues that are affecting its own citizens.

Government' s continued allegiance to the oil bigwigs will have no positive impacts on the nation as a whole. It is only a few men whose pockets will be lined with more money than they will ever be able to spend. Energy alternative startups will be drown out in a government subsidized marketplace that heavily favors the long-standing champions of cheap, non-renewable energy resources. Consumers will remain unaware of the good value, environmentally friendly energy alternatives available to them and, in turn, find themselves paying more and more for their oil addiction as time goes on.

There are two solutions that could see renewable energy providers competing on a level playing field. The first is for governments to subsidize renewable energy or provide incentives to consumers who purchase renewable energy. Subsidies and incentives can be a very effective way to encourage change amongst a reluctant populous. It is a well known fact that people dislike change. In fact, nine out of ten people would rather die than change. One of the very few means by which to encourage a person to change voluntarily is by speaking to their wallet. If there is a financial incentive to buying 'green' energy or a financial punishment for purchasing products (e.g. SUVs) and energy that is not green, the uptake amongst consumers is likely to be higher. Ireland has had great success in encouraging its citizens to take cloth bags to the grocery store. How did the government do it? They introduced a law that required grocers to charge the customer 15 cents for every plastic bag s/he used. By providing tax breaks and incentives to consumers who buy solar panels, purchase wind energy or lease hybrid cars, government can take an active role in encouraging uptake of these new technologies. Furthermore, subsidizing the industry could potentially bring new technologies to market at a quicker pace and cheaper rate. Enterprises could focus their energies on R&D and product development, rather than on where their next investment dollars were going to come from.

The second solution is for government to stop subsidizing all energy and energy-related industries. If a free market truly existed, the best of the new start-ups in renewable energies would triumph above all other energy providers. A free market essentially encourages the greatest productivity and least amount of waste. Certainly, in this arena, renewable energy providers would leapfrog their oil industry counterparts. Consumers would be able to discern the true cost of various energy technologies and make free choices, instead of being guided to buy to the wishes of government representatives that have been bought off by an industry that knows its glory days are under threat and is fighting an unfair fight to keep its vested interests alive.

While either of these solutions has the potential to create economically favorable conditions for private enterprises in the renewable energy business, the elimination of government subsidies across all industries would best serve the interests of both consumers and the business community at large. Instead of forking over tax dollars and letting the government representatives decide which industries and companies should reap the benefits of operating in a subsidized marketplace, the consumer would have the opportunity to make a free choice in a fair marketplace essentially eBay on a bigger scale. Governments have a track record of making short-sighted decisions and acting out of self-interest or self-preservation. A truly free market will meet the consumers' demands and reward the most productive and best suppliers. If the citizens of any country want to move towards becoming a sustainable society, establishing a free market is the best way forward.

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