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July 7, 2010

The Costs of a Clean Energy and Climate Bill

‘It’s not like everybody doesn’t want clean energy, it’s that everybody doesn’t want to pay twice as much to acquire the same energy.”
As we learned from the President’s oval office address, the government’s focus is not on cleaning up the oil spill, but to politicize it into passing a clean energy and climate bill.  Apparently, the President and liberal members of Congress believe that if a clean energy bill had passed in 2009, the oil spill would have never happened (but that is neither here nor there).
So, what does a clean energy bill look like?  In order for clean energy to be the consumed energy of choice, it needs to be affordable for all Americans and traditional energy sources need to become expensive.  Clean energy becomes affordable through government subsidization.  This is where the government pays energy companies to invest in wind, solar, and now nuclear power.  As we have seen in a previous CSC article, the subsidizing of clean energy has its failures.
Who do you think pays for those energy subsidies that are designed to make clean energy “cheaper?”
The other portion of the clean energy bill is to make traditional energy sources more expensive.  How is this done?  It’s done by taxing the amount of emissions that the traditional energy sources create.  This would not only include coal and oil burning emissions, but the emissions created from consumer usage (like a car or oil burning furnace).
What’s wrong with this idea?
No matter what the source of a consumer’s electricity is, their utility bills will rise.  This is because all energy companies have some form of oil or coal burning electricity division.  Even if 100% of the electricity you consume if generated from wind power, you will face utility bills of easily twice what they were.  This is because the energy companies, who cannot convert to green energy overnight, will have pass their cost increases (taxes) onto their consumers in order to continue producing electricity for some profit.
The only winner in this debacle appears to be the government.  They will be able to take in more revenue and blame the energy companies as their rationale.  If government wanted to get greedy (or if they really needed money), they could also increase the taxes on gasoline, making it more expensive at the pump.  Even if they don’t go down this road, gasoline will become more expensive because the emissions tax will also apply to refineries.
Finally, what I don’t seem to understand is how making gasoline, the ownership of older cars, and utility bills more expensive is going to help those who are struggling economically in this country.
So, how do we make green energy the popular energy?  The answer is simple; by demanding it.  If the consumer prefers to have green sources of energy, and the utilities industry is deregulated to give consumers that choice, utility companies will innovate ways to cheaply create and sell green energy in order to improve profits.  It’s the same model that built the automobile industry and several other technological innovations that have come since.  Innovation is created by consumer demand, not government mandate.

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