I am a huge fan of the Seinfeld Show. I like it because it takes everyday things, blows them out of proportion and makes them humorous – at times hilarious. It may not be a ‘show about nothing,’ but it is a show about the little things of everyday life that most people don’t notice.
One of my favorite Seinfeld episodes has Kramer coaching Jerry on how to get money for his stereo by tearing it up, insuring it through the post office, shipping it to himself and making an insurance claim for the loss. When Jerry questions Kramer about who will pay for the stereo, he responds, “…they will write it off.” After a discussion of what “writing it off” means, Jerry accuses Kramer, “… you don’t even know what a write off is, do you!”
I can’t help but think of that episode and dialogue whenever I hear the debate about government incentives and subsidies, especially subsidies and incentives for green energy or green power. You hear a lot about green power and how it will reduce the amount of carbon dioxide released into the atmosphere, thereby mitigating global warming, reducing our dependency on foreign oil, creating a new economy based on green jobs, lowering our energy costs and generally improving our standard of living.
You also hear a lot about the need to provide government incentives to “jump start” the green economy. Just last month, U.S. Secretary of Energy, Steven Chu, and the President’s Council of Advisors on Science and Technology (PCAST) – how did we ever live without acronyms? – urged a substantial increase in the U.S. government’s investment in green energy-related research and development of $16 billion per year so we can maintain pace with China in energy innovation. That investment is in addition to the billions of dollars in government subsidies and incentives the ethanol program, the wind power program, the solar energy program and any other program that claims to be green already gets from the government.
Advocates of green energy encourage even more subsidies and incentives for green energy than those proposed by Secretary Chu and PCAST. They argue that without subsidies and incentives, renewable and green power projects cannot develop, thrive or expand. Why would that be? The answer is that almost all renewable or green energy costs more, and for most green energy substantially more than conventional fossil fired energy. Green energy is simply not cost competitive, and those green energy developers would go bankrupt without government subsidies and incentives. And they will not be competitive until the price of conventional fossil energy approximately doubles from its current levels.
Also, government subsidies and incentives allow the government to pick winners and losers. If they like a certain type of technology or if the developer of a project was a rather large political contributor, a technology or project may be favored.
But didn’t government subsidies and incentives help promote nuclear power and combustion turbine technology? They did, but now that the research and development is complete, those technologies are run by the private sector with private investment. But what research is being done on wind and solar? They just need the subsidies and incentives to stay afloat.
Finally, who pays for the government subsidies and incentives for renewable or green energy projects? If they are government subsidies, of course the government does.
This is where the Seinfeld episode comes into play: Do you know what a government subsidy or incentive is? The government takes your money from taxes – and we all pay taxes, whether income, property or sales taxes – and decides who gets the free government handout of subsidies and incentives.
So in the end, the government takes your money and gives it to developers of solar projects, wind farms and ethanol projects, which will increase your cost of electricity. So you pay at least twice. You pay the higher cost of power from green sources and you also pay taxes for the government to subsidize and incentivize those green projects. If you didn’t know that you paid, you are like Kramer, you don’t really know what a government subsidy or incentive is.
Gary Smith, President & CEO
