Every industry clamours for subsidies. Most should be ignored. Why should the alternative energy industry be any different?
The genius of the 1984-1990 reforms was the dismantling of a Byzantine structure of incentives and taxes that tipped the economy in favour of the lazy and the stupid.
Is there any reason for thinking the biofuels, solar, wind and wave energy industries should be given a ‘kickstart’, in the form of government protection?
The industries argue they are ‘strategic’, which so often is byword for ‘special interest’. The farmers of Europe and the American midwest also claim to be strategic, but the subsidies they receive screw up export markets for the rest of the world and have significantly contributed to the global food crisis.
Subsidies are dangerous tools, so you need a damn good reason to entertain them.
Is there one for alternative energy?
Yes. The science of global warming is unequivocal. We must wean ourselves off our reliance on fossil fuels if there is any chance of avoiding the dangerous warming of our planet. We know the technology for sourcing energy from wood, wind and wave exists. We know that end users care less about where their energy comes from than that engines start and aeroplanes fly. We know in time the market will prevail. We also know that lurching from oil to alternatives is not a piecemeal operation. It requires scale and coordination. It requires a reason for businesses and their customers to risk investment and change.
New Zealand will have a carbon tax or an emissions trading scheme of some sort this year. But more is required. If there was ever a time to clamour for subsidies, protection and incentives to kickstart our alternative energy industry, this is it.