Solar and Wind Energy Subsidies Should Continue Forever

Guest Blog | July 23, 2012 | Energy Policy

This blog, written by Zachary Shahan, was originally posted on Cleantechnica and can be found here.

It seems that every day I’m reading (or even writing) about solar and wind energy’s prices and potential without government subsidies — but it is really ridiculous that dropping government subsidies should even be on the table.

Amongst the political right (especially politicians and media), there’s a common argument that renewable energy shouldn’t be subsidized, even though the majority of the public supports such subsidies, and even though fossil fuels have been getting subsidies for about a century (and continue to get them).

Even on the left, many people talk about the days when solar and wind won’t need any subsidies. Aside from the issue of fair dues (renewable subsidies continuing until historical subsidies of the various energy sources are more or less balanced), there’s one basic reason why solar and wind energy should receive subsidies “forever.”

Basically, a “free market” is an ideal that doesn’t exist in real life. Even if you take away all direct government subsidies, a free market doesn’t exist. Why? Well, there are a few reasons, but one of the most important is that some goods create societal costs that are not represented in their price (thus, distorting the market and making the market not work “as it should”).

Coal, according to a Harvard Medical School study last year, costs the U.S. at least $500 billion a year in health and environmental costs. This is $500,000,000,000 not accounted for in the price of coal- powered electricity. If it were, coal would be priced out of the market.

Oil, similarly, has tremendous health costs, as well as tremendous military costs — a good deal of our military resources are very clearly spent on protecting our foreign oil supplies.

Even by extremely low estimates, the public health costs of coal, natural gas, and oil come to $120 billion a year.

Now, since that isn’t accounted for in the price of our energy goods, someone should step up and correct this market failure by either putting a tax on these dirty energy options, or by subsidizing their alternatives to an adequate degree. Truthfully, I think it would be better if we just adequately taxed coal, natural gas, and oil. However, if that is never going to happen, solar and wind energy (as well as geothermal, hydro, biogas, EVs, and so on) should perpetually get government subsidies to address this inherent market failure.

Unfortunately, renewable energy subsidies are unfairly demonized by some people (i.e. FOX News and Tea Party politicians), and they are at more risk of being cut than fossil fuel subsidies… year after year. As such, I understand the strong desire many people have for clean energy options to beat dirty energy even with the referees bought and the scales heavily unbalanced in dirty energy’s favor. However, I don’t think we should condone the idea that renewable energy subsidies should one day end — we should make it dead clear that renewable energy subsidies serve the specific purpose of correcting a huge market failure.

With me?


Image: money & pollution via shutterstock

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