“Green” Policies Poison Innovation

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How government “encouragement” undermines technological development

In recent years, “green energy” has become a major hot-button issue. Advocates argue that the inevitability of global climate change caused by carbon emissions, an end to our “addiction” to fossil fuels and the need for renewable forms of energy all necessitate increased research and development in alternative energy technologies. Government programs to develop green energy include taxes, subsidies and regulation of everything from consumer products to the production and use of fossil fuels. Taken together, these programs represent an attempt to engineer massive changes in the landscape of energy production and the way we consume it, at a cost of billions. Given the struggling economy, these facts demand a closer look.

The first fact to consider is one that many alternative energy advocates seldom deny: in terms of abundance, accessibility and power output, most alternatives are vastly inferior to currently available fossil fuels. Far from being free, solar and wind energy face myriad challenges that prevent their wide-scale application to national power generation. An area the size of the state of Utah would need to be covered with photovoltaic panels in order to satisfy energy consumption in the United States, not to mention the challenges of high-efficiency power transmission, maintenance, and power generation on cloudy days. In areas of Europe, where wind constitutes a significant fraction of total energy production, changing air currents have played havoc with power grids, sometimes leaving large areas without power on calm days.

Many environmentalists actually view such shortcomings as virtues of green energy—in contrast with inexpensive and readily-available fossil fuels. In the words prominent environmentalist Paul Ehrlich, “Giving society cheap, abundant energy…would be the equivalent of giving an idiot child a machine gun.” For those that agree with this view (or have accepted the “green guilt” that it teaches), reliance upon inferior energy sources would force mankind into a more meager existence with a reduced impact on an otherwise-pristine Earth. Fundamentally, this viewpoint stands against human happiness and progress, characterizing the wonders of industrial civilization—light bulbs, automobiles, cell phones, industrial agriculture and personal computers—as part of a destructive “footprint” to be minimized, rather than an achievement to be embraced.

That said, let us grant alternative energy advocates the benefit of the doubt and suppose that they do want human life to flourish. Assuming alternative energy holds some potential to that end, the question remains: Can government policies make green energy a viable benefit to our lives?

After all, government is the dominant force in alternative energy development today. It creates tax credits for installing solar panels and driving hybrid vehicles, subsidies for start-up companies dedicated to generating solar power, and billion-dollar initiatives aimed at developing hydrogen fuels and electric vehicles. It imposes laws to restrict the ability of individuals and companies to produce carbon dioxide, declares carbon dioxide a pollutant, and may soon require that a certain percentage of energy come from renewable sources. Through the use of these contrived, state-funded carrot-and-stick mechanisms, bureaucrats have attempted to steer energy research in what they have deemed to be the right direction.

But government involvement in the development of energy technologies has not driven an energy revolution; wind and solar continue to fall well short of generating the electricity needed in an industrialized nation, and after decades of development the effective range of electric vehicles still remains limited to a modest fifty miles under electrical power. In all of the government-driven research areas, we’re still waiting for technologies and energy sources approaching what’s available in the form of gasoline and coal-fired power plants.

There’s no denying that current researchers face a number of difficult challenges. But it’s instructive to consider the contrast between the current pace of alternative energy research and the amazing developments in the early history of the petroleum industry. Technological advances too numerous to count included the use of kerosene as a lighting source, improved extraction and refinement techniques to increase the yields of usable petroleum products, and the creation of dozens of products like jet fuel and plastic water bottles. None of these achievements depended on government incentives. There was no tax on whale oil to force the move to kerosene, no government subsidies to research pipelines and no government agency to investigate the viability of developing new technologies from crude oil. The early petroleum industry was able to achieve so much because the best producers in the world were free to pursue what they judged to be the best methods.

But, as in virtually every other area of production in the last century, politicians intervened. They imposed new laws and regulations constraining the choices open to petroleum producers. Today, a complex array of rules—including drilling restrictions and environmental regulations—has stifled the innovative spirit of the early petroleum industry. Few new refineries are built, and we extract relatively little oil domestically despite vast proven reserves. Government permission is required to drill new oil wells, and rare mistakes like the recent Gulf oil spill are punished with arbitrary long-term bans on drilling. The end result of decades of government edicts has not been a more creative, productive oil industry, but rather one in which all innovations are centered on finding ways to produce in spite of arbitrary government restrictions.

Even in the areas that government allegedly promotes innovation, any actual implementation of innovative solutions is subject to the consent of lawmakers, regulators and special interest groups. Companies wanting to develop solar energy in the deserts of California are routinely blocked by environmental groups applying political pressure to preserve the area for “study”. Efforts to construct wind farms off the coast of Massachusetts have been stymied by layers of government permission-seeking well before the first turbine can produce a single watt. Even products as simple as solar panels for private homes are subject to government approval before they can be used to supplement domestic energy consumption.

On a larger scale, the changing of political leadership can result in dramatic shifts in focus from one area of energy research to another. With the election of the Obama administration there was a parallel shift in government funding from hydrogen-based towards electric/hybrid cars. In the words of Energy Secretary Stephen Chu when announcing massive cuts to the government’s hydrogen vehicle initiative, “We asked ourselves, ‘Is it likely in the next 10 or 15, 20 years that we will convert to a hydrogen car economy?’ The answer, we felt, was ‘no.’” When support for technology development is subject to the changing winds of political opinion, it becomes much more difficult for entrepreneurs to sustain any long-term innovative push.

Government intervention in the energy market, whether in the form of subsidies, taxes, or regulatory “oversight”, creates artificial uncertainty for producers and innovators. Why expand refinement capacity over several decades when the EPA might pass carbon restrictions next year? Why develop new coal plants with a “cap and trade” scheme looming on the horizon? Why spend millions to research cheaper internal combustion engines if the government is going to hand your competitors a massive subsidy for developing an electric-only car motor? Too often, the prospect of these government actions makes the risk of implementing new solutions unacceptably high. So, rather than undertake additional development and possibly run afoul of an antitrust suit or an overzealous regulator, the safe decision for producers is to continue doing what they’ve always done and no more—the essence of stagnation.

In the end, government attempts to push development of “desirable” technologies undermine the innovative spirit required for the development of any technology. Innovation means discovering a new, unanticipated solution to a problem—but when the solution is dictated beforehand, it blinds innovators to better ways of doing things. For example, by offering huge incentives to develop solar and wind energy while demonizing fossil fuels, the government puts off-limits a wide array of potential innovations. Diverse new ways of attaining energy, ranging from nuclear fusion to genetically engineered plants capable of producing hydrocarbon fuels, go under-examined because government bureaucrats have already decided that solar and wind are the desirable solutions.

The lesson of the most inventive periods in human history, from the Industrial Revolution to the explosion of Silicon Valley, is that in order to create new technologies and services human beings must be free to think independently and act on their own judgment, in their own interests. The transition from horses to automobiles was not mandated by government legislation. The replacement of lamp oil with electric light bulbs wasn’t driven by taxes and subsidies. If energy harvested directly from the sun or wind is going to power our civilization in the coming centuries, it’s going to have to be able to do it without government crutches—born from individual, thinking minds, without government obstructing their course.

Alexander Hrin completed his Bachelor’s in Engineering Physics and Masters in Applied Physics from the Colorado School of Mines. He is currently enrolled in the Biophysics PhD Program at the University of Michigan as well as the third year of the Objectivist Academic Center.


Posted by on March 6, 2011. Filed under Science & Technology, Spring 2011. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry