A new report from the Brookings Institute shows public funding for clean energy has—and will continue to—plummet from a high point in 2009. Clean energy has made strides in the past few years by adding jobs in a recession and making clean technology more efficient and affordable. But a national emphasis on budget austerity will contribute to a falling rate of subsidies for clean-energy companies. The federal government needs to learn from Solyndra’s bankruptcy, which left the government on the hook for $535 million, instead of walking away from clean energy as a whole.
Due to the inefficiencies associated with the public sector, any venture into the private-sector needs to be fully justified. The private sector is wholly unequipped to handle problems or inefficiencies in certain areas of the market. Two areas in which the private market falls short are allocating the costs (or benefits of production externalities) and allocating resources efficiently. Although the private market has done an incredible job making sure consumers are happy, the way we have decided to spend our money might not be the best way for society as a whole. For example, The Avengers which is smashing box-office records world-wide, cost $220 million. Although there are millions of pleased movie-watchers, those $220 million might have been better spent. The private market gives consumers the right to spend their money, but it does not guarantee it will be well-spent. Individuals are selfish and have dumb demands such as wanting to see things explode in 3D.
The private sector needs to be adjusted in order for companies to benefit from positive externalities or to suffer from negative externalities. An externality is something outside of the offered product or service that affects areas outside of production and sales. The government already helps correct for externalities. For example, if a paper mill dumps chemicals into a river creating a negative externality, the government will step in and make sure that the company handles at least part of the cost of river clean-up. Dealing with negative externalities is much trickier in certain situations, for example, with tobacco companies or gun manufacturers.
Clean energy should receive public funding because the long-term positive externalities outweigh the short-term costs. By moving away from carbon fuels, our society will avoid the price and supply instability of fossil fuels the costs of cleaning up the pollution associated with fossil fuels, and the environmental costs of getting them out of the earth.
America needs to invest in clean energy in the long-term. Currently, subsidies and government funds are the first things to be cut every time the political pendulum swings from right to left. This process harms long-term economical growth in affected sectors. However, clean energy’s dependence on research and development, along with high costs of production and prototyping combine to make clean energy industries especially vulnerable to having the rug pulled out from under them.
The current political climate is so hostile that hoping for long-term, bi-partisan agreements to spend money on clean energy is beyond useless; even calling out for such cooperation invites conflict. However, the current level of spending needs to be maintained (and hopefully increased in a less-hostile political scene) if America wants to be on the forefront of clean-energy production. Otherwise, we will be importing clean energy supplies from whatever country was farsighted enough to encourage clean energy industries.
The push for a smaller government has been championed by tye-dyed occupiers, gun-wielding tea-partiers and the GOP since the housing bubble burst. Austerity and all of its positive and negative connotations have become a part of the national and international political conversations. America needs to balance its budget to get debt back in control. Austerity measures such as cutting into welfare might be necessary, but those measures need to be balanced by revenue-increasing measures and good business sense. Short-term austerity needs to be reconciled with long-term investment. No austerity measures should impact future revenue streams in areas such as green energy.
Over 40 years ago, the government took on a massive scientific effort to take man to the moon and we eventually succeeded. The NASA model might not be practical anymore, but the government needs to, once again, be a leader in our economy. Being a leader doesn’t mean hemorrhaging money, or giving out bad loan guarantees. It does mean taking risks, being bold and holding hope over fear.
David is a senior majoring in English. Please send all feedback to opinion@dailycardinal.com.
