Ever since his State of the Union address, we’ve been thinking about the proposals that the President unveiled that night, such as transitioning the country’s electricity generation to 80 percent clean energy by 2035. That is certainly a laudable goal, but achieving even half of it will require some fundamental changes in energy policy, including the recognition that traditional energy sources will remain a large part of the power mix for decades to come.
Renewable energy, including hydropower, currently provides less than eight percent of our national demand. Yet despite decades of government subsidies in excess of $120 billion, these sources have failed to develop into competitive alternatives to traditional fuels. Instead, misallocated government funds have been used to prop up uncompetitive technologies–especially wind, solar and biofuels.
Plus, there’s been some serious problems with where we’re spending our money:
Ethanol is perhaps the most egregious example of resource misallocation. This high-cost fuel source relies on millions in government subsidies annually to artificially reduce the price paid by gasoline refiners. Since private investors have not hopped on the ethanol bandwagon, production likely would dry up in the absence of government funding.
Unlike ethanol, clean burning natural gas doesn’t require governmental largesse to stay competitive. What’s more, it’s a fuel we possess in great abundance. In fact, the Energy Information Agency recently doubled its estimates of recoverable gas in the U.S. to 827 trillion cubic feet—equivalent to a 150-year supply at current usage levels.