Yearly Climate Spending 10x More Than UN Estimate for Ending World Hunger
Ideally, government investment in all energy sources would be reduced to zero. That would expedite the next technological breakthrough. As Vaclav Smil wrote for Scientific American:
Governments cannot foresee which promising research and development activities will make it first to the free market, and hence they should not keep picking apparent winners only to abandon them soon for the next fashionable option.
Smil says governments do this because they base their policy-making on wishful thinking rather than realistic expectations.
This is exacerbated by the vague and idealistic nature of the strategy for “investing in low-carbon technologies.” Imagine asking your financial advisor what to do with your retirement portfolio and all he or she says is to “invest in stocks.” You’d have plenty of room for error. In calling for investment in low-carbon technologies, the UN and its U.S. adherents basically tell us to invest as much as we can get the taxpayers to bear. As to what “portfolio” of technologies to spend on, we’re given no cost-benefit analysis of returns on investment, only vague promises that “wind and solar” will become more efficient if we spend more. Yet they are so far away from ever competing with fossil fuels that the spending so far has been basically wasted.
Consider, for example, the U.S. Department of Energy’s Section 1705 Loan Guarantee program. A December 2013 Reason Foundation study found 22 of the 26 companies that received the loan guarantees were rated as “junk” grade investments or lower, and the other four were rated as low class. The researchers found 83 percent of such “investments” went directly to solar, ignoring the fundamental investment strategy of diversification by betting all the available taxpayer funds on a single technology with the smallest market share. When the researchers dug deeper to see how this came to be, they found the taxpayer funds were allocated in proportion to the recipient’s lobbying expenditures. The loan allocations had more to do with political connections than the companies’ merit.
If there is a significant public interest in changing the nation’s energy production, governments should invest their taxpayers’ hard-earned money only in energy forms that are scientifically proven to accomplish real increases in productivity and the climate-reduction goals they are pursuing (however unwisely). Jumping from one fad to the next wastes taxpayer money and distorts an industry that’s central to the nation’s economy and people’s well-being.
Taylor Smith ([email protected]) is a policy analyst at The Heartland Institute.