The Solyndra Rule vs. the RAND Rule

It’s getting tiresome reading all these hit jobs on renewable energy and electric vehicles. First Solyndra, and now Ener1. In any emerging industry, there will be winners and losers, but the goal is still achieved in the end, a clean, domestic, renewable energy industry powering domestically produced electric vehicles. This goal is imperative given that relying on the status quo is economic and environmental suicide.

It’s perfectly reasonable to incentivize these nascent industries since the dirty cars and dirty energy replaced are massively subsidized themselves, and therefore present a classic uneven playing field.

A very strong case can be made for several dollars/gallon in taxes to pay the combined external costs of the economic, national defense, environmental, and health problems caused by oil.

Instead of whining about less than a billion dollars given to these two companies, let’s see if there might be bigger fish to fry. According to a recent RAND study, we spend $80 billion dollars per year in military costs protecting our access to the world’s oil. This is exclusive of the wars for oil, just protection. Based on the quantity of fuel consumed last year, this is roughly 55 cents per gallon. I propose we adopt the RAND Rule. We begin removing subsidies for renewable energy and electric vehicles as we simultaneously decrease the subsidies for oil, coal and natural gas. Working out the details will be contentious, I admit, but once we get started, the market will work its magic. Then we’ll see what technologies are preferred when all costs are on the table.

Posted by Paul Scott

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