Tampa Bay Business Daily

What are sime reasons why the status quo for not increasing incentives for alternate energy?

I'm doing debate in my school. and the resolution is whether we should increase incentives for alternative energy... Can someon give me reasons on why the status quo does not be changed and more incentive are not needed... Your answers will be greatly appreciated... AND 10 PTS!!!!!!!

Public Comments

1. The only legitimate reason for having publicly funded incentives is that there is a market failure - that there are externalities to using conventional energy sources that are not included in the price. If that is the case, then the first step is to quantify what those additional costs are. Only then can one decide on the best way to "incentivize" the migration to alternate sources. The obvious and economically most effective way to "incentivize" the transition is to make conventional energy sources more expensive - exactly as expensive as needed to include the external costs - typically by taxes. Unfortunately, that is not politically feasible in the U.S. (though petroleum product taxes in Europe are much higher than than in the U.S.) so subsidizing alternative sources is seen as a politically feasible alternative. Still, the subsidies should not be greater than is needed to offset the "true" cost of conventional sources. Since these costs have never been accurately evaluated, there is no reason to believe to that the current subsidies are too low. Furthermore, the prices of conventional energy sources have been rising recently, so even if there was good reason for increased incentives two years ago, there is that much less of a reason now. As an indication of what mischief subsidies can do, the U.S. government offered subsidies for ethanol production so farmers started growing more corn and brewers starting building fermentation plants to make ethanol. The result has been skyrocketing food prices, causing food riots all around the world and clear evidence that ethanol from corn is not a good alternative energy source as it causes massive environmental damage. At the same time, better alternative sources, those that did not get subsidies, didn't get that kind of investment. So the idea that governments can subsidize the right things is very dangerous. (One of the reasons ethanol got such subsidies was political - agribusiness has lots of clout in Washington.) Note that this would not have happened if there were a carbon tax on fuel instead. Then all alternative energy sources would look better and could compete among themselves.