Energy Policy Reform: Further Notes on Proposed NCFCA Topic
All three NCFCA policy topics have long and complex economic and political histories. And a wide range of reforms have been proposed for today’s federal immigration, FDA, and energy policies. An earlier post provided an overview, and below are further notes on relevant history and economics for the energy policy resolution.
With an energy topic many fun cases can focus on reforming energy efficiency regulations, with examples from light bulbs to home appliances. (The debate is not over whether more energy efficient appliances are a good thing, but over whether central planners should be writing and enforcing detailed energy efficiency regulations).
A Freedom Light Bulb blog post from 2015 Why Continued Energy Saving Rules Make No Sense: Lighting as a Main Example (April 16, 2015) reviews fives challenges with energy efficiency regulations:
>> Energy saving is not the only advantage a product can have
>> Enforcing lower energy use on any given product affects performance, usability and/or appearance as well as price, whether on buildings, cars or household products including lighting (http://ceolas.net/#cc21x)
>> Supposed savings are questionable at both overall life cycle and usage specific levels, and replacements may have their own environmental concerns.
>> Even if products needed targeting to save energy, there are better ways of doing it (consumer information, taxation+subsidy policies, marketing policies)
>> Future advantages of a banned product may be unknown
Federal energy policy raises the price people pay for gasoline due to Federal Renewable Fuel Standards (see overview debate: Pro-Con: Is it time to end the renewable fuel standard that requires ethanol in gasoline?, Tri-City Herald, March 15, 2018).
At the state level, energy policies also have many problems. Renewable Portfolio Standards turn out to be expensive and ineffective (see Do Renewable Portfolio Standards Deliver?, BFI WORKING PAPER • APR 21, 2019)
But another angle for federal energy policy is grid resilience. The U.S. economy depends on grids connecting electricity producers and consumers and similar pipeline and rail networks connecting coal, oil, and natural gas production and processing to manufacturers and consumers. How secure are these grids from incompetence, terrorist attacks, hackers, solar disturbances, and electromagnetic pulses?
A Judith Curry post Energy Security and Grid Resilience (Climate Etc., April 20, 2019) notes the natural security need for a more secure electricity grid:
Our military operators cannot afford to be subject to large scale power outages, as much of the northeast coast experienced in 2006 when a squirrel knocked a tree limb on a power line in Ohio causing lights to go out across the region for days.
Here is a similar squirrel story from 2018, Squirrel knocks out power for more than 12,500 in Erie County (The Buffalo News, November 18, 2018). Debaters will enjoy the opportunity to run energy policy reform squirrel cases…
An online panel video looks at: The Department of Energy’s Grid Resilience Proposal: Examining Impacts on Consumers and Energy Markets (Heritage Foundation, November 30 2017).
Energy Policy Should be Guided by the Free Market — not by Subsidizing Losers (The Hill, February 20, 2018) is critical of Trump Administration energy proposals:
At the nexus of incompetence and cronyism lies the pinnacle of bad governance. For an administration that promised to drain the swap, energy subsidies do precisely the opposite. Subsidizing unprofitable power plants puts cronies, not America, first. …
While Energy Department officials insist they’re “with the federal government” and are “here to help” improve grid reliability, the very interests that would benefit from a reliable grid say government bailouts will not help. Heavy industry, dismayed by the Energy Department proposal, told Congress that “DOE is saying manufacturing jobs are not as important as the jobs at economically obsolete … power plants.” It’s not the role of the federal government to determine whose job is more important.
If power plants are profitable, subsidies only serve to pad a company’s bottom line. If they’re not profitable, taxpayers should not prop them up. Rather than keeping them on life support, government should allow economic failures to fail so that those resources are free to flow to more useful purposes elsewhere in the economy.
How Government Saps Our Energy: What Government Green Power Debacles Tell Us About Markets vs. Politics (American Consequences, August, 2018) reviews some of the past failures of federal energy policy policies, investments, and enthusiasms:
We have decades of experience with the federal government trying to subsidize and encourage new sources of energy. A Department of Energy report in 2008, before the massive expenditures of the Obama “stimulus” package, estimated that the federal government had spent $172 billion since 1961 on basic research and development of advanced energy technologies. Consider some of the big-ticket items…
Next in article is overview of The Clinch River Breeder Reactor, Synthetic Fuels Corporation, $1.2 billion…to develop a hydrogen-powered car, clean-coal Healy project in Alaska to the Kemper plant in Mississippi, and Solyndra Debacle.
And then references the “Downsizing Government” website, Chris Edwards summarized criticisms of subsidies. Headings here, with descriptions at link:
• Firms that receive subsidies become spendthrift.…
• Subsidies are not driven by market demands.…
• Subsidies distort business decisions. …
• Venture capitalists have already funded the best projects, leaving the dogs for the government. …
Energy Subsidies (Downsizing Government, December 15, 2016)
Beyond economics problems with energy subsidies and regulations are public choice related political realities. The benefits of these programs are concentrated on the companies and investors who benefit from them. Environmental groups can promote green energy programs, and conservative and libertarian think tanks can oppose them, but the energy policies are controlled (or “captured”) by the companies and investors who earn billions of dollars each year from green energy programs, subsidies, and policies.
Another sources for detailed critical analysis of state federal energy policies and regulations is the Master Resource blog, a program of the Institute for Energy Research. I have a number of Master Resource posts on various energy policies here, direct links here:
• Environmental Accounting and Green Subsidies: The Biofuels Mistake, (MasterResource, December 4, 2018),
• Solar in Seattle? Not So Fast (clouds, clouds, my Dear Watson), (MasterResource, July 13, 2017)
• Ford’s Electric Cars in China: Good News or Bad? (MR, April 13, 2017)
• Energy and U.S. Middle East Policy: Shaky Foundations (MR, June 25, 2014)
• Cars, Washing Machines, or Both? (energy is the master resource ….) (MR, March 24, 2011)
Many past Economic Thinking posts discuss energy technology, economics, and policy.
And finally, it is important to emphasize that private energy companies also lobby for beneficial federal energy policies. Coal and nuclear power companies lobby for federal subsidies, tax breaks, and beneficial regulations in the same way that wind, solar, and ethanol companies lobby for benefits from federal policies.