Sound Energy Policy Requires Level Playing Field
Imagine this: Just before last year’s Super Bowl, the National Football League (NFL) Competition Committee gets together and changes the rules of the contest.
The New England Patriots would only need to advance the ball five yards for a first down. Touchdowns for New England would be worth 10 points, while the New York Giants would get just 3 points. The Giants would also not be permitted to kick any field goals or extra points.
The NFL then encourages both teams to take to the field, and declares, “let the best team win!” The response would be outrage. No fan would stand for the NFL tipping the scales in favor of one team over another.
As preposterous as the scenario sounds, this is precisely Washington D.C.’s approach to our nation’s energy policy. Members of Congress and agency bureaucrats – both Democrats and Republicans – routinely push laws and regulations with the express purpose of giving one fuel an advantage over all others.
But, favoritism in the energy sector, through subsidies and mandates, presents serious consequences to our trillion-dollar federal deficit and, especially for American families and small businesses who face rising energy bills.
Corn-based ethanol, in particular, provides a cautionary tale about the price of the federal government basing long-term energy policies on a “flavor of the day.”
Although ethanol subsidies began in the late 1970s, their popularity skyrocketed in the early 2000s. The Left saw bio-fuels, like ethanol, as a way to wean ourselves off of oil. While many on the Right, particularly those based in America’s heartland, viewed the corn fuel as a potential economic boom for struggling farmers. It was a perfect political storm that led Congress in 2004 to create the $6 billion-dollar-a-year Volumetric Ethanol Excise Tax Credit (VEETC).
Tens of billions of dollars later, ethanol has lost its luster, even among long-time supporters such as Al Gore. A collection of strange bedfellows – from Citizens Against Government Waste to the Environmental Working Group – voiced their opposition to corn subsidies, with concerns ranging from their impact on the national debt to ethanol’s larger-than-anticipated net carbon footprint.
Thanks to political pressure coming from all directions, Congress ultimately ended VEETC. But the U.S. is still trying to free itself from a web of costly ethanol subsidies and far-fetched mandates.
Consider the Renewable Fuel Standard (RFS). This government requirement established a guaranteed market for ethanol producers, forcing oil refiners to blend and consumers to buy ethanol fuels. Yet, seven years after Congress approved the RFS, bio-fuel manufacturers have yet to produce a drop of cellulosic ethanol in the U.S. In fact, the Congressional Research Service projects that cellulosic bio-fuels will not be commercially available on a large scale until at least 2015.
A National Academy of Sciences 2011 report candidly stated what now seems obvious: grain ethanol “could not compete with fossil fuels in the U.S. marketplace without mandates, subsidies, tax exemptions, and tariffs . . . This lack of competitiveness raises questions about the use of government resources to support bio-fuels.”
If our nation is to pursue a balanced energy policy, our federal government should allow oil, natural gas, coal, nuclear and the myriad of alternative energy technologies to compete under the same rulebook.
Unfortunately, the Environmental Protection Agency (EPA) under both President Bush and President Obama haven’t wholeheartedly embraced that approach. Just one of many examples beyond the RFS is the EPA’s proposed new power plant rules, which essentially dictates that future power facilities run on natural gas instead of coal. Although I have long supported the exploration, development and use of natural gas, EPA, as a result of Congressional action, is imposing a quasi-mandate through new emission standards, which discourages the two fuels from competing on their own merits.
The same can be said of the more than $100 billion the federal government doled out in clean energy subsidies in the last three years. Solyndra is a high-profile example, that is now a favorite in partisan attacks. But to be fair, many of the initiatives designed to create this hypocritical “equal footing” – including the loan guarantee program that gave birth to Solyndra – began under the Bush Administration.
We all want more investment in sustainable energy and a healthier environment, but the government simply cannot do it at an extreme cost to American taxpayers and future generations.
It is time for our federal government to learn from past mistakes. That starts by Congress putting all energies on a level playing field and killing unnecessary subsidies and backdoor regulatory mandates.
That is the only way to prove to the American People that we are learning from history and not just doomed to repeat it.
