Energy Budget Cuts Are Attack On Subsidies, Not Science

Posted on Wed 07/10/2013 by


NickLorisBy Nicolas Loris ~Department Of Energy

House Members who are proposing cuts to the Department of Energy (DOE) budget are facing bogus criticism that the cuts are an attack on science. The reality is that the cuts are attacks on subsidies and duplicative spending and, in fact, do not go far enough.

The lowest-hanging fruit for cutting are the programs in which the DOE is attempting to commercialize technologies to make them cost-competitive, including renewable energy sources, biofuels, batteries, clean coal technologies, nuclear reactors, advanced oil, and natural gas extraction techniques. For instance, the House report on the Energy and Water Development Appropriations bill for fiscal year 2014 notes:

The Solar Energy program funds applied research, development, and demonstration of both photovoltaic and concentrating solar technologies to reduce the cost of solar power to economically competitive levels.

The federal government’s role in research is not to lower the costs of the technology to make it competitive in the marketplace. Government support that targets one group or industry artificially props up that market. Rather than increase competition, a special endorsement from the government gives one technology an unfair price advantage over others.

Further, subsidies reduce the incentive to become cost-competitive and encourage dependence on the government’s preferential treatment. Those energy sources that need help from the government are those that cannot compete economically without them. If a project makes economic sense, however, the investments will occur without the subsidy. In that case, the subsidies simply offset the private-sector investments that would have been made either way.

Spending cuts in the DOE’s Office of Science is not an attack on science, either. In an era where fiscal responsibility is a must, the cuts should identify duplicative programs as well as areas in which scientific research is creeping into commercialization activities. Heritage has offered a number of cuts to such programs.

Again, this does not mean science research is being done away with at the DOE. It simply means that research institutions should find greater efficiencies, drop less promising research, or find alternative sources of funding. And we can still have commercial success stories from that basic research.

Economic breakthroughs and innovative ideas will flow to the marketplace when basic research conducted for a national need can be spun off into the marketplace. That is the mechanism that brought us the Internet and GPS.

There is plenty of research conducted at DOE labs that the private sector would not invest in because the possibility of profit is too inaccessible. But there is plenty of DOE research that is simply not the role of the federal government, that is overtaken by special interests, and that the government does not do well. Reforming those programs removes the government’s meddlesome involvement in energy activities that are best left for the private sector.

Nicolas Loris, an economist, is a Policy Analyst at The Heritage Foundation .  Roe Institute for Economic Policy Studies. Loris researches and writes about energy prices and other economic effects of environmental policies and regulations, including climate change and “cap and trade” legislation. He also articulates the benefits of free market environmentalism.

Read more informative articles at Heritage – The Foundry .