Does our government subsidizing and tariffs protection of solar, wind, ethanol industries best serve the market and what effect does this have on global economic conditions? As founder and investor in an alternative energy consulting business, www.greenleafenergygroup.com, for the past five years I have witnessed that many solar panel companies have benefited from increased sales of equipment and services as a result of federal incentives to increase investment activity in solar and wind. The primary incentives were tax credits that were built into the Energy Act of 2005 and renewed annually by Congress since then. However, in the past 3 years many of these subsidized industries (primarily solar) have failed at the expense of tax payers. The prices of solar photovoltaic modules have fallen in the United States by more than 50 percent. China now out produces the US due to their under valued
currency, “dumping” and their government subsidies. It has virtually destroyed the market for our domestic producers and has affected global markets.
I believe the U.S. energy market, if left to its own devices, without distortions or subsidies, will continue to provide plentiful and affordable power. In my opinion the best strategy for government to pursue at this time:
1. Federal government should set a floor on the price of natural gas because the low prices of gas are making their existing and planned projects uneconomical and uncompetitive.
2. Eliminate all subsidies and protection of energy producers including oil, coal, gas, nuclear, ethanol and wind and solar. It would be better for national security, the balance of payments, the budget deficit, and in the long run for the environment. The elimination of existing subsidies would create a level playing field and benefit green energy sources. It would enable them to adapt to long-term energy supply strategies pursued by public utilities and also respond better to price signals and consumer demands. It’s likely that short-term fluctuations in oil prices will continue in the future due to middle east conflicts. Petroleum industry studies show that there will be substantial demand-supply imbalances during this coming decade, particularly as China and India continue to add tens of millions of new cars each year. But, these countries are not energy producers and will need to rely on imports of oil for vehicles. This will drive up cost of oil expand demand for our domestic natural shale gas, nuclear and green production development in the interim. If the US exploits our abundant natural gas resources, protects the price and eliminates subsidies to all energy sources then will solar and wind become more competitive. by Darrell James, AIA
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