Although it is tempting to leave renewable resource research and development in the invisible hands of the free market, it is insufficient to properly achieve a sustainable hold in the energy industry.
In theory, cancelling government subsidies for sustainable energy research and development would be more efficient: it would reduce taxpayer burden, transfer the financial burden of science into the private sector, and allocate funds more effectively based on demand.
However, the renewable energy industry is currently not as feasible nor profitable as traditional nuclear generation or fossil fuel extraction, and is seen mostly as a niche product for holier-than-thou sustainability yuppies. How would this attract backing from the private sector? Sustainable energy research and infrastructure requires large amounts of capital, which investors are usually reluctant to donate. We can see a similar investor bias in startup culture: do you ever wonder why software startups get all the buzz? Angel investors are more interested in supporting small software-based startups because there is less financial risk involved. Meanwhile, nobody is offering to take up Elon Musk’s hyperloop design because it costs too much money. Similarly, who today would volunteer funds to build an experimental wind farm or research paving highways with solar panels? Even a large company is unlikely to find this kind of research immediately lucrative.
One might argue that eventually the cost of renewable energy will exceed that of oil, such that it would be more financially advantageous to fund sustainable energy initiatives instead of pay-rising costs for limited supplies of fossil fuels. However, that would pose an undue burden on consumers: the point where the costs of the energy types become equal is likely to be extremely high. It’s like delaying action against global warming: why wait until consumers can actually feel the pinch of elevated temperatures (or fuel prices) instead of acting proactively?
Speaking of proactive investment, how often does the private sector prioritize our collective future over quarterly profit? If that were the case Wal-Mart would raise the wages of its stockpeople and cashiers so they could actually make a living off of their menial jobs, but clearly human collectivism is the stuff of science fiction movies. It is foolish to leave renewable energy development to the whims of the private sector.
Not only is it important to begin developing renewable energy now before the eve of the impending oil crash, but subsidies can also be used to reduce the price of renewable energy. This serves multiple purposes: reduced prices can help the renewable energy industry gain a hold in the energy market and fund future development independently, and also help consumers by exposing them to similarly priced options to non-renewable energy.
Furthermore, renewable energy is not the only subsidized industry: for example, Canadian milk farmers, Canadian film projects, and the Canadian Space Agency (CSA) are all heavily subsidized by the government. But nobody singles them out for criticism. Even Harper’s conservatives approve of funding small business owners. In fact, the federal government might even be lauded for supporting domestic agriculture, funding local artists, and building the Canadarm. Subsidizing renewable energy is no different: subsidies are useful in funding struggling startups and employing Canadians.
Subsidies are not only used for industry projects, but for research too. If you’re applying for grad studies, you’ve probably heard of NSERC. It would be a crushing blow if you heard your own field of study was suddenly at a disadvantage for acquiring funding now. One could argue that investing in renewable energy now has few immediate applications, but honestly, most academic studies are years from real-world implementation. Limiting research funding to immediately profitable projects would drastically limit the field of proposals and stifle innovation. It would also totally wipe out the CSA, quantum physics, and treatments for rare diseases.
Proponents of removing energy subsidies have too much faith in the free market to fulfill the needs of its consumers.
In summary, it’s unfair to single out government sustainable energy subsidies for cancellation when many other forms of research, development, and commerce with minimal immediate profit or application also rely on government aid to compete domestically. Waiting until we are financially forced to study renewable sources of energy poses a greater burden to consumers than planning for the development of future energy sources post-peak oil.
Leave a Reply