Monday, June 06, 2005
On this day:

Coal and the Energy Bill

News of the Alabama coal industry's fortune is great stuff, in that it provides a good illustration of the free market working its wonders. As is so very common, though, the federal government is proving unable to resist the urge to "help out" the process.

The energy bill currently being considered in Congress and supported by the Bush administration would provide tax breaks and subsidies for the development of so-called "clean coal" technologies.

On its face, that doesn't necessarily sound like a bad thing. Everyone wants energy that is cleaner and cheaper. But, when the government grants subsidies and preferential tax treatment to favored energy producers, it often ends up hurting more than helping by interfering with market signals.

In a recent column, NRO's Rich Lowry said of the energy bill: "Bush relentlessly touts the as a potential salve for high gas prices, but it won’t be, because it runs afoul of a force with which Bush should be familiar — the free market." He goes on to say that much of the bill is "a grab-bag of subsidies for new technologies — for “clean” coal, fusion energy, hydrogen-powered fuel cells, etc. — that are likely dead-ends, or the people interested in developing them wouldn’t be so needful of the federal teat."

Unfortunately, when there are so many sucklings waiting their turn at the spigot, some are bound to get fatter than others.

The Heritage Foundation's Ben Lieberman, discussing "the good and bad of the energy bill," writes:
The energy bill...tries to pick winners and losers among sources of energy. It contains many targeted tax breaks designed to encourage certain alternative energy technologies and to promote energy efficiency and conservation, as well as billions of dollars for research. Solar and wind energy systems, fuel cells, alternative vehicles, and nuclear and clean coal research are among the beneficiaries. This is nothing new, but decades of such efforts have yielded few results. Programs that funded research on electric cars and synthetic fuels demonstrate that the federal government does a poor job and wastes money when it tries to steer the energy market. Washington would do better to stay on the sidelines.
Lieberman praises the market-oriented portions of the bill, but says, "For every provision that would take energy policy in a free market direction...there are several others that reek of central planning." If conservatives in Congress fail in their efforts to remove the centralizing features of the bill, they should fight for its defeat, even if that means voting against the President. Welfare for individuals has been rolled back over the past decade, and it's high time to take on corporate welfare.