Incentives, not investments

The Federal Government’s recently failed bet on the future success of solar panel start-up Solyndra wasted roughly half a billion dollars of taxpayer money.

An important impact of the Solyndra failure is that it has given added weight to critics of any government attempt to steer the private sector toward fewer emissions and more green technology.

The effect of this boondoggle is further amplified by the continual decline in Americans’ interest (and even belief) in the changing climate. Even Barack Obama, who promised to make the United States a “leader” in the fight against global warming, failed to mention the issue in his most recent State of the Union address.

Looking at the 2012 presidential hopefuls, and the relatively cool weather felt across much of the country last year that eased worry for many of a warming globe, it seems that advocates of an American green economy should be bracing for an even colder winter ahead.

But this apathetic trend is a tragedy. In the last few years, scientific consensus about the causes and likely effects of climate change, already strong, has increased. Traditionally uncooperative nations, like China and India, have taken steps to address their own emissions with a cap and trade plan and coal tax respectively.

Still, green energy and climate mitigation plans will never gain much momentum in the United States if the government continues to mess up with the ones that we do have. And contrary to what many conservatives would have us believe, failure is not how it has to be.

The crucial distinction that leaders who are interested in more green programs should be making is between plans that offer direct investments for companies, and those that offer them incentives.

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More than just rhetorically, politicians should avoid ‘picking winners’ in the private sector, no matter how noble the intention; like Michael and baseball, it’s just not their sport. This mistake however, isn’t just reserved for socialist Democrats. George Bush’s ethanol subsidies led to overinvestment in a sector that wasn’t naturally the best choice, and an ultimate bust that hurt everyone involved– even those that wanted more clean sources of fuel.

Government is good for reflecting and acting on societies’ normative views of what should be, but it isn’t a good business partner.

Incentives for companies and individuals however, for such broad goals as ‘fewer carbon emissions’ and ‘renewable sources of energy,’ combine the best of the public and private sectors. Incentive based policies allow the market to do what it does best; harness individual creativity and pick winners- in more efficient pursuit of worthwhile goals.

Cap-and-trade plans and investments in research, rather than production, are two examples of policies that can work. The result of using incentives, rather than investments, will not only be fewer wasted dollars and greater progress towards reduced emissions, but also more public willingness to pursue such plans in the first place.

As scientists become more certain of the threats posed by global warming, why it is that politicians continue to think they are able to pick winners remains a mystery.