After meeting with his Cabinet recently, President Obama said that "it is time for us to move to a clean energy future."
A clean energy future is certainly a worthy goal. The questions are: How do we get there? And what are the costs and benefits? Is the path forward best determined by government through multiple new taxpayer subsidies, mandates, and regulations? Or is the free market the best way to test the viability of new sources of energy and their appeal to consumers?
The fact is, government has a poor track record for picking alternative sources of energy. President Jimmy Carter launched the U.S. Synthetic Fuels Corp. with great fanfare in 1980 with the intent of producing enough synthetic fuels made from shale and coal to supply the equivalent of 40 percent of petroleum imports. Congress authorized up to $88 billion for the project, but it was plagued by scandals, charges of lavish spending, and mismanagement. It was eventually repealed just six years later, after wasting billions of taxpayer dollars and yielding less than two percent of the production target Congress had set, according to Science News.
More recently, corn-based ethanol was touted as an environmentally friendly, homegrown gasoline substitute to foreign oil, and Congress lavished the industry with new taxpayer subsidies and guaranteed a growing share of the marketplace for it. But myriad problems with ethanol have come to light since then. A recent article in AAA World noted some of them: an average 25 percent drop in a car's fuel economy if E85 fuel is used (if you can even find it, given that it's sold at less than two percent of gas stations nationwide); higher CO2 emissions than the gasoline it is meant to replace; and even greater reliance on foreign oil because of the energy intensiveness associated with producing and transporting the corn-based product. Food prices shot up, as well.
Wind power, solar, and biofuels all hold a great deal of promise, but none of them can reliably fuel our cars, homes, or businesses anytime soon. And they are all vastly more expensive than the fossil fuels on which we currently rely. Even if all of the mandates and subsidies in the President's cap-and-trade legislation work as planned, such renewable sources of energy would satisfy only about 20 percent of our energy demands a generation from now.
Whether we like it or not, our economy depends on a reliable supply of fossil fuels, and that isn't going to change in the near future. Washington Post columnist Robert Samuelson recently pointed out that, by 2035, there "will be more people (391 million vs. 305 million), more households (147 million vs. 113 million), more vehicles (297 million vs. 231 million) and a bigger economy (almost double in size)." Even though we will get more of our energy from alternative sources - about 11 percent of our energy, according to Samuelson, it will do little to offset our reliance on fossil fuels.
That's why the Obama administration's moratorium on deepwater oil drilling is problematic, as is its suspension of lease sales and drilling in the Arctic. The result of that policy will be an even greater reliance on foreign oil, high prices at the pump, or both.
It is wise to plan for a clean energy future and for government to help the private sector move forward, but ultimately it's the marketplace, not government, that will determine the most economically viable kinds of power production.