U.S. tax subsidies for energy technology

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Saturday, December 26, 2009

I drive a hybrid and strongly believe that the U.S. government should promote energy independence. But tax subsidies for alternative energy are an awful way of addressing the issue. The Post's Dec. 18 editorial ["Cash for clunkers"] opposing Vice President Biden's efforts to expand tax credits for advanced energy technologies does not go far enough.

All energy subsidies -- not just the Biden-endorsed credit -- suffer from two fundamental flaws. First, they provide arbitrary quantities of financial support to specific technologies. You don't have to be a raging free-market conservative to see that Congress is poorly equipped to pick winners and losers -- particularly when it comes to evaluating cutting-edge technology.

Second, all subsidies stifle the most basic response to the problem of excessive energy consumption, that is, to undertake activities that consume less energy (walk instead of drive, teleconference instead of travel, etc.). Politicians and the energy industry are desperate to sell the public the idea that painless energy-saving through technological advancement will solve all our problems. That would be nice.

But let me point out that economics tells us: With energy subsidies, our losses as taxpayers will be greater than our gains as energy consumers. The more efficient solution to our energy problems is to scrap all energy subsidies and institute an explicit carbon tax or a cap-and-trade program.

Martin A. Sullivan, Falls Church

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The Dec. 18 editorial on subsidies for plug-in hybrids was shortsighted and misinformed.

First, the expansion of tax credits announced by Vice President Biden will build U.S. manufacturing capacity for renewable energy generation -- not simply plug-in hybrids. To create a clean-energy economy, we must build our capacity to manufacture solar panels and wind turbines. The program is over-subscribed, with meaningful investments that we can pull in to create jobs now. Expanding it would put Michigan's advanced manufacturing capabilities to work producing clean-energy solutions for the world.

Second, the editorial failed to acknowledge the broader economic, environmental and national security benefits of investing in advanced vehicle research and commercialization. As the National Research Council report noted, plug-in hybrid electric vehicles hold great promise to reduce greenhouse gas emissions and our dependence on foreign oil. Making batteries better and cheaper is critical to making this possible.


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