Conservative Principles Now

President Obama declared in the State of the Union address that the United States must be a leader in clean energy production. Why? “Because I’m convinced that the country that leads in clean energy is also going to be the country that leads in the global economy,” the president reiterated today in a speech at Savannah Technical College. That’s a good reason if it were guaranteed to be true, but doesn’t it depend on the cost? If a manufacturer in another country can produce these technologies more cheaply than a manufacturer in the United States, doesn’t that benefit both economies? President Obama went on to say,

“[W]e have the potential to create millions of jobs in this sector. These are jobs building more fuel-efficient cars and trucks to make us energy independent. These are jobs producing solar panels and erecting wind turbines. These are jobs designing and manufacturing and selling and installing more efficient building materials. ”

“We” meaning the government. This assumes, of course, that the money to build clean energy falls freely from the sky. But it doesn’t; the money is taken from other sectors of the economy where it could be put to more efficient use. So far, the green stimulus hasn’t produced the results initially purported when the American Reinvestment and Recovery Act became law.

In Baltimore, for instance, stimulus dollars have been spent to patch roads, install newer furnaces and painting rooftops white to conserve energy. According to the Washington Post’s Alec MacGillis, none of these projects, as well as others, have created a single job. Another example is in the state of Indiana, where companies have “weatherized 82 homes out of its three-year goal of 25,000, and reported zero new jobs from the spending.” ABC News reports that at the end of 2009, only 9,100 have been weatherized to save energy through the stimulus as part of a $5 billion program. $522 million of the $5 billion has been spent thus far, which equates to over $57,000 per home.

President Obama also emphasized the importance of government run energy efficiency rebate program for appliances saying that it will save consumers money on their electricity bill. If it will save consumers money, why does it need a rebate? While these products use less energy, they also cost more up front and if forced into the market too quickly by the hand of government, can be much less reliable. More importantly, these decisions should be left to the consumer – not influenced by the government – writes Heritage Analyst James Gattuso:

“Congress [or the government] is in no position to determine whether consumers would be better off if they bought more expensive, but more efficient, appliances. Consumers are in the best position to do this, and to decide whether they prefer to save money now on the purchase price, or later, in lower energy bills. A consumer who uses an air conditioner for just a few weeks each summer, for instance, generally would prefer a low purchase price. Poorer consumers, who already must minimize appliance use, would benefit least from higher efficiency and would especially prefer lower purchase prices.”

President Obama certainly isn’t marching to this drumbeat alone. Today California Governor Arnold Schwarzenegger pushed for more green job creation and for state legislators to pass his California Jobs Initiative. “It will send a clear message to every CEO, entrepreneur and innovator if you invest in California, we will invest in you,” Governor Schwarzenegger said.

If the CEOs, entrepreneurs and innovators make a successful product, California won’t have to invest in them as taxpayers. They’ll simply buy their products.

We can see the t-shirt slogan already: I paid $58,000 for solar panels and all I got was a $21 carbon credit that bought me this t-shirt. It’s not very catchy, but that’s the story of a Harrisburg couple, Tami and Randy Wilson, who installed solar panels in their home to reduce their electricity bill:

The Pennsylvania couple has sold the world’s first carbon credit awarded for a reduction in personal carbon emissions. About 1,800 others have signed up to follow suit – underlining the US public’s readiness to press ahead on the issue. The Wilsons began by getting rid of their son’s heated water bed, turning off power to computers and televisions when not in use, changing to energy-efficient light bulbs, hang-drying their laundry and, finally, investing $58,000 in a solar panel system – until they reduced their electricity bill to zero.

Then they signed up on the MyEmissionsExchange.com site to have their energy savings calculated. They found that they had already saved one tonne of carbon, which earned them a carbon credit. The exchange sold the credit for $21.50 to Molten Metal Equipment Innovations of Ohio, taking a 20 per cent commission.”

Make that $17.20 for the t-shirt after subtracting the exchange’s take. But if we wanted to have some truth to a t-shirt for the Wilsons, it would read: Thank you taxpayers for paying for $36,000 of our investment and thanks federal government for creating an artificial market for carbon dioxide credits. The Wilsons received an $18,000 federal tax credit and an $18,000 rebate check from Pennsylvania’s state government and also expect to collect $2,700 in renewable energy certificates.

If the Wilsons or any other family wants to invest in solar panels or windmills to save money, they should be permitted to do. But they shouldn’t do it with the taxpayers’ help. There’s a reason renewable energy only meets a very small portion of our energy needs. Wind and solar cannot survive without preferential treatment through subsidies, mandates and tax breaks. Take away those government handouts; do the Wilsons still make that $58,000 investment? There’s a big difference between a $19,000 investment and a $58,000 investment.

Tami Wilson said, “It takes a trigger point to get people involved. For us it was the announcement of a 30 per cent increase in our electricity bill.” That’s the point of government policies like cap and trade; after all, President Obama said that under his cap and trade plan, “electricity prices would necessarily skyrocket.” The goal is not only to raise the price of energy high enough for people to use less of it, but also to distort the market in such a way to make renewable energy prices able to compete in the market.

The Wilsons expect to sell renewable energy certificates to carbon-emitting companies that need to meet government mandates and will recover their investment in six years. Unfortunately, the American taxpayers cannot make such a claim.