What is a subsidy? Are loan guarantees for nuclear energy types of subsidies? What about tax loopholes for fossil fuels? Though these are indirect subsidies, I am speaking about direct government subsidy programs, specifically such as in the case of ethanol. I was pleased to see Josh McDonald reference the destructive potential of well-intentioned government intervention in his last post.
But onto Christine Harbin’s recent post. I do suspect to some degree that we are ‘talking past’ each other and do agree on the distortive effect of many types of government intervention. Mostly, the market will provide for necessary demand if there is a profit to be made. The ‘profit/loss’ system that Harbin speaks of is just basic capitalist market principle. But mostly energy is a different story and is not left to its own devices like other industries as its actions have far reaching consequences beyond its sphere.
In all of the debate over energy and climate policy, we speak of reducing carbon emissions, greening the economy, green jobs etc. but what about energy security? This is an often overlooked, but fundamental part of the energy equation. The security of our energy supply is not only in our economic interest but truly a national security issue.
But often the interests of climate security and energy security can run counter to each other. Where to find the balance between the two? Is it an ‘energy subsidy’ if the government backs nuclear power plant construction with loan guarantees for reasons of national security? Conversely, what about if it offers the same loan guarantees but only for reasons of reducing carbon emissions?
Now many argue that alterative energy will lead to energy security, but unfortunately this will not be the case as recent government projections demonstrate that the United States and the world will be increasingly reliant on traditional fuel sources in the coming years. So is it wise to undermine our access to energy sources that are essential to our economic and national security?
Yasmeen Hussain speaks of cutting the use of natural gas in the United States for environmental reasons but gas is important for America’s energy security. Natural gas is a domestically produced fuel source that has the potential to cut down imports of oil from other nations. Another fuel source to increase American energy security is with shale gas. This unconventional fuel source was practically non-existent five years ago and has the potential to ensure American energy security for decades to come. By increasing the exploitation of shale gas reserves (which are estimated in the hundreds of billions of barrels of oil equivalent), the United States could eliminate its demand for imported gas (and these would be from hostile nations such as Russia that use energy as a political weapon) and actually could become a gas exporter in the years to come. But here comes the catch: There are many environmental concerns with the process in which shale gas is produced. This is a prime example of the tradeoff between energy security and environmental security, a tough choice but a choice we must make.
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