There Are Far Better Ways to Clean the Environment Than Taxpayer Handouts

There Are Far Better Ways to Clean the Environment Than Taxpayer Handouts
(AP Photo/Andrew Harnik)
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(After parts one and two, this is the third in a three-part series examining taxpayer-subsidized green energy.)

The U.S. Department of Energy is hardly on the cutting edge of technological innovation. Its guaranteed loan program bankrolls safe and well-established companies whose taxpayer-funded projects probably would have happened anyway. Its cleantech startup “investments” do not result in meaningful private sector engagement. There are plenty of examples of what goes wrong when the government tries to steer markets in a specific direction. Despite these failures, policies can be pursued to empower companies to balance innovation and ecology without breaking the bank. Free market reforms are a far better alternative to taxpayer-backed loans and subsidies.

It is difficult to start a business and expand the venture into uncharted territory. One key issue is ensuring that a business meets all of the regulatory requirements set forth by federal and state governments. The Securities and Exchange Commission (SEC) has shown in recent years that it isn’t afraid to target startups for investigation if the agency believes that the companies have not disclosed enough information about previous problems. This not only creates line-drawing problem, but also results in a situation where outsiders are afraid to take control of a troubled startup and steer the company in a better direction. Anything short of a full recounting of previous management’s failures (which may not always be apparent to new leadership) can result in multi-million-dollar fines.

And the more varied a company’s financial offerings become, the greater potential exists for regulatory scrutiny. In fact, large fines await companies that “improperly” register utility tokens as securities, even though investors in the blockchain space are more than capable of sizing up these products. In the energy sector, this regulatory tedium is part of a larger uncertainty surrounding government rules. There are large, unresolved questions surrounding exactly who will pay for power transmission upgrades, along with concerns about how centralized the power grid will become in the future.

While the Federal Energy Regulatory Commission (FERC) is trying to answer these questions, the rulemaking process is likely to be a drawn-out process and seems to unravel quickly from one presidential administration to the next. In other words, all sorts of regulatory uncertainty abound for new companies with innovative energy ideas. Combine these headaches with intricacies such as electricity rate design, and it’s little wonder why management professionals flock to well-established companies instead of small, upstart ones. President Biden should tackle these issues by working closely with leadership at agencies such as the SEC and FERC to see how rule relaxations could make life easier for entrepreneurs.

Harnessing innovation isn’t the only path to a cleaner environment. The new administration’s climate policy focuses almost exclusively on the private sector, while ignoring government actions and services that contribute to pollution. Researchers at Indiana University and Texas A&M found that publicly-owned power plants, hospitals, and water utilities were 15-20 percent more likely to have violated federal air and water standards than their private counterparts. And, at least 900 (70 percent) of the 1,300 contaminated Superfund sites spread out across America are military-related. 

Surely, these are issues that President Biden could address with the help of agency heads and local leaders. The military could stand to devote some of their colossal budget to environmental remediation instead of buying ineffective $1.5 trillion fighter jets. On a more local level, a round of utility privatizations would immediately reduce pollution. These steps could help advance the Biden administration’s environmental goals without breaking the bank. They are also a far more attainable and practical alternative to the failed DOE programs that Biden wants to expand.

The right combination of regulatory reform and priority shifts can clean the air while ensuring continued innovation for decades to come.

 

Ross Marchand is a senior fellow for the Taxpayers Protection Alliance.



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