Tuesday, February 1, 2011

Energy subsidies

Solar and wind power are relatively new technologies, and the costs per kilowatt hour of power produced are still high. Since they are easier on the environment than fossil fuels like coal or oil, the government offers a variety of economic incentives to increase their use. While some groups wish the government would stop supporting them, it seems to me that there is at least a good case for this help.

However, it turns out that most types of energy actually get some kind of help from the government. Should government help the coal industry find ways to pipe its emissions underground? That way they shouldn't contribute to global warming; of course, then we end up making a "dirty" industry have an even stronger cost advantage than it already has. (It remains "dirty" in that it still produces CO2 and toxic ash, even if some of its outputs go underground.) Should we support nuclear power, since it too doesn't contribute to global warming, and since historical incidents prevent insurers from being willing to cover the development of nuclear facilities? How about corn-based ethanol? It's not economic, meaning the costs outweigh the benefits, and its impact on climate change is debatable, but it's not coal or oil.

So where should the government draw the line? Tough question, and a very real one for policymakers. These issues are taking shape as a battleground for the next budget: it'll be interesting to see which proposal wins out.

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