Don’t Reward Failure with Taxpayer Money
In a testimony before the Senate Committee on Energy and Natural Resources, Heritage Foundation fellow Nicolas Loris explained that the federal government has wasted precious financial resources by sinking taxpayer money into one failed green energy project after another.
All too often the government “invests” in politically favored companies that create products that are not viable in the free market. This gives said companies no incentive to improve their product or to reduce production costs. The private sector, on the other hand, rewards companies based on the quality of their product, not on political connections or agendas.
During his testimony Loris stated:
Over the past several decades, Congress has implemented a number of policies to spur the investment of renewable forms of energy. Through a multitude of policies, the federal government has attempted to build a clean energy economy with the help of the American taxpayer and by doing so is skewing the risks and rewards of energy investments.
All energy sources and technologies should have an opportunity to compete in the marketplace. Those investment decisions are best left for the private sector. The government’s intervention in capital markets artificially lowers the risk of a project, decreases the incentive to innovate, and increases the incentive to use the political process to lobby for handouts. Full or partial government investments reward special interests over market viability; those technologies that are truly marketable should not need financial support from the taxpayer.
Congress should adopt free-market policies and reduce unnecessary roadblocks to clean energy investments, but it is not the role of the federal government to play venture capitalist. Private investors should take the risk and reap the benefits or suffer the losses from their investments. Government involvement impedes that process at the risk of the taxpayer and to the detriment of the American economy.
The conservative principles on which Loris based his testimony are completely sound. But if you need more evidence that he is correct, just look at all the green energy companies that have received taxpayer money and still failed, from Abound Solar to Solyndra to Fisker and SoloPower.