New Budget Is Big Step Back in Energy Freedom

Posted: Apr 17, 2018 10:41 AM

There were great, but reasonable, expectations earlier this year of a “Big Step Forward on Renewable Energy Subsidies” (RES). Instead, Congress took a “big step backward” in their massive government spending bill of $1.3 trillion, which the President went on to sign last month (although reportedly reluctantly so).

In this bill, instead of the expected 72% reduction in the Energy Efficiency and Renewable Energy (EERE) program from $2.04 billion to $575.5 million, there was a 13% increase to $2.3 billion.

EERE is a program of the federal Department of Energy (DOE) and RES is a sub-expenditure of EERE. And to make things even more complicated, DOE is not the only federal source for these funds. There are also the Departments of Agriculture, Interior, Labor, and Housing and Urban Development.

RES numbers can be found for FY2013 from the federal Energy Information Administration (EIA) in their latest report of March 2015 entitled Direct Federal Financial Interventions and Subsidies in Energy.

This report documents four major types of direct and indirect subsidies, along with a number of different types of tax breaks. Renewables received $8.4 million in direct subsidies in FY2013, which was 53% up from $5.5 million in FY2010.

RES harms American families and businesses, with a “one-two punch”. The first punch hits them as taxpayers, by taking money out of their pockets that could have otherwise been spent or saved. The second punch hits them as consumers of electricity, through both higher prices and lower reliability.

That is bad news. The worse news is that these hits are not just one time only nor stay at the same levels. They grow over time like some sort of perverse compound interest. They also spread throughout the local, state and national economies, making them all less and less competitive.

Regarding prices, the federal Bureau of Labor Statistics (BLS) has documented the upward trend in electricity CPI over the past decade for the USA and within states like Texas. This can be clearly seen in the two graphs below, with the nation on the left and parts of that state on the right. The correlated rise in prices and RES is no coincidence. The high and rising costs of inefficient renewables make it so.

The “Lone Star State”, unfortunately, has been “leading the charge” on installing renewables like wind. That, fortunately, will be changing given the continued efforts from the likes of the Texas Public Policy Foundation. TPPF, in fact, has a new “RES Zero” campaign that will help educate local, state and federal voters and elected officials on how and why RES violates both sound economics and sound science to the detriment of nearly all.

Texas interestingly has much in common with Australia. This includes lots of sunshine, heavenly steaks and a cowboy inspired culture of self-responsibility. Although Australia is even “bigger than Texas” (geographically), it has a similar population size and economic mix centered around a handful of large metropolitan areas.

However, when it comes to RES and the harms it causes, the “Land Down Under” provides a stark warning for not just this state but also for the rest of the union. This is because Australia too has been ramping up RES over the past decade, with similar but predictable bad impacts on families, businesses and economies.

The “poster child” for this is the state of South Australia (SA). It reportedly has the highest electricity prices on the planet. On top of this, it is the blackouts capital of the country. That is no mystery, as SA has a renewable energy mix approaching 50% and a Renewable Energy Target (RET) of 75% by 2025. This promises to be turned around given the recent election win by the conservatives in that state.

It shouldn’t need reminding (yet often still does) that renewables, like wind and solar, are intermittent. This means, unlike coal and gas, they don’t work when there isn’t enough wind blowing or sun shining. And no, batteries still do not store electricity.

There is only one solution, in both the southern and northern hemispheres alike, to the economically destructive practice that is RES. “Slow, stop and reverse!”

Slowing or stopping the growth of these inefficient imposts would be a good start. The far better solution is to reverse this counter-productive spending. And such reductions should be both as soon and as large as is politically possible, on the way to the day when RES is no more.

In so doing, it is important to realize that tax breaks are NOT subsidies. This explicitly or implicitly assumes that Big Government has, or should have, first rights to 100% of your income and wealth. The Left regularly use such Orwellian “Double Think” and “Double Speak”. 

One of the clearest American thinkers and communicators of the 20th century was Austrian School economist Murray Rothbard. On the issue of tax breaks as subsidies, he wrote in Power and Market:

“Many denounce tax exemptions, including those advocates of the free market who attack it as equivalent to a subsidy and therefore inconsistent with the free market. Yet it is not equivalent to a subsidy. In the latter case a man is receiving a special grant of privilege wrested from his fellowmen; in the former he is escaping a burden imposed on other men. Whereas the one is done at the expense of his fellowmen, the other is not. It is clear that if a certain burden is unjust, blame should be levied, not on the man who escapes the burden, but on the man or men who impose it in the first place. If a tax is in fact unjust, and some are exempt from it, the hue and cry should not be to extend the tax to everyone, but on the contrary to extend the exemption to everyone.”

The “bad news” is RES won’t get rid of itself, given the strong array of “Baptists and Bootleggers” who are for keeping and expanding these subsidies and related regulations. The “good news” is that "We the People" have TPPF on our side as well as HeritageHeartlandIERCEI and the many others in the exceptional “American Liberty Scene”. It is time to get RES out of our electricity markets and out of our wallets.