Academic journal article Policy Review

Power Failure: Let's Pull the Plug on Federal Energy Programs

Academic journal article Policy Review

Power Failure: Let's Pull the Plug on Federal Energy Programs

Article excerpt

As the Clinton administration tries to sell the American people on the merits of government-driven industrial policies, it would be useful to examine one such effort - the U.S. Department of Energy. The department's current objective, as outlined by the Clinton administration, is to provide the "institutional leadership necessary to achieve efficiency in energy use." Don't be deceived: That's bureaucratic shorthand for a national industrial program. Assembled long before President Clinton took over, the DOE and its predecessors have been on a 30-year quest to manage the energy market by subsidizing the development of various technologies.

By any measure, however - be it in dollars, quads, or kilowatts - the DOE's efforts have failed. The department's entire mission rests on a flawed premise: The notion that government-sponsored scientific and technological ventures can and should be applied to steer market decisions toward the goals of federal regulators.

If the historical record is any guide, the recently announced clean-car initiative undertaken by the White House and the Big Three automakers will not break the pattern of failure in the statist pursuit of industrial policy. Since 1980, the United States has spent more than $50 billion of taxpayer money (in 1992 dollars) to develop energy production conservation technologies that have either failed technically or lacked market appeal.

How does the government perpetuate this problem? Program-by-program.

A Renewable Failure

From 1980 to 1992, American taxpayers spent almost $6 billion on the development of renewable technologies. Such technologies include solar and geothermal powers, biomass, wind-generated energy, municipal solid waste burning, photovoltaics, and, most substantially, hydro-power. The renewables program, which has enjoyed a significant increase in funding in the last five years, is supposed to make renewable power sources competitive with more traditional forms of energy. It has failed.

In its 1980 Annual Report to Congress, the Energy Information Administration EIA) - an independent arm of the DOE responsible for the collection and publication of energy-related data-indicated that it was optimistic about the chances for renewable technologies to penetrate the market. It wrote glowingly that: "The new energy technologies ... have attracted much attention, perhaps because they seem to promise supplies of energy that are virtually unlimited and cheap, with no major environmental problems."

EIA was not stingy in its forecasts for renewables either. It projected that domestic energy production from renewables would rise from 3 quads to 3.6 quads from 1978 to 1990. A "quad" is short for quadrillion British Thermal Units, or BTUs, a standard measure of energy consumption on a national level.

The forecast was wildly wrong; renewable energy production actually declined. In 1980 renewables accounted for slightly more than 3 quads in an economy that consumed about 76 quads. In 1992 renewables accounted for 2.7 quads in an economy that consumed roughly 82 quads. The reason for the drop is that nearly all renewable technologies are unable to compete with other energy sources. They had been propped up by a tax break granted in 1978, which expired in the latter part of the Reagan administration. Thus, in die last 12 years the federal government has spent $6 billion on renewables, while production by renewable energy sources has dropped by more than 10 percent.

Ignition Point

As big as the disaster in renewable energy has been, the fusion program has been worse. The taxpayers have been funding this fiasco for more than 40 years; since 1980, the federal government has spent more than $7 billion on its fusion program. Yet the program has never produced a single watt of electricity. Then-secretary of Energy James Watkins, who worked on the program in the 1950s, recommended in 1991 that it be pared back. …

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