A Thought on Energy Subsidies

If there is a central theme to the Renewable Energy Finance Forums generally, it’s pragmatism.  You can listen to every word from the presenters — as well as from each the other participants as they network on breaks between the marathon sessions — and trust me: there isn’t so much as a breath of idealism.  The show isn’t about what should happen, it’s about what will happen.

I had lunch the other day with an incredibly bright guy, a very practical physicist whose business characterizes materials for companies in solar, wind, and electric transportation — as well as dozens of other industries.  I immediately saw that he was lukewarm on renewable energy.  “I’m here to drum up business, but I’m reluctant to be connected with an industry that relies on subsidies,”  he sneered.

When I pointed out that oil and gas get 12 times the subsidies that clean energy receives, he looked down at his arugula sheepishly and replied quietly,” Well, I guess what I meant to say is ‘subsidies that might go away.'”

Those few words encapsulate the root of the clean energy problem.  Not only are the subsidies for fossil fuels enormous, they are taken for granted; they’re so well entrenched that they’re completely invisible.  Contrast that to the mountain that is made out of the relatively small tax credits and government grants under TARP and ARPA-E to stimulate development of clean energy.

I have to hand it to these oil companies for the deftness with which they’ve soaked us for everything we’re worth.  The checks that we taxpayers write to them every day go completely unnoticed. These people have taken larceny and elevated to the plain of art.  The lesson here is clear and simple: we must not underestimate the skill of the people we’re playing against.