Government

Subsidies for 'Renewables' on Chopping Block?

President Trump threatened cuts, which highlights the manifold problems with such cronyism.

Jordan Candler · Dec. 6, 2018

“As a matter of our policy, we want to end all of those subsidies.” That warning shot was given this week by Larry Kudlow, President Donald Trump’s economic adviser, regarding the future of electric vehicles. Currently, EV purchasers can take advantage of a hefty tax credit of up to $7,500. However, that tax credit is, at least notionally, slated for nullification. Kudlow added, “And by the way, other subsidies that were imposed during the Obama administration, we are ending, whether it’s for renewables and so forth.”

According to Reuters, “The tax credits are capped by Congress at 200,000 vehicles per manufacturer, after which the subsidy phases out. … Experts say the White House cannot change the cap unilaterally.” In other words, subsidy repeal should have been addressed long before Republicans lose their majority in the House next month. Nevertheless, the Trump administration’s position is salient.

Investor’s Business Daily opines that the eradication of subsidies “would be a major victory on the road to energy freedom.” The editors add, “No doubt there will be much wailing and gnashing of teeth within the Green Movement. How will electric cars survive without government’s guiding hand? The answer is, most won’t. Otherwise, the federal government wouldn’t need to subsidize them.”

At its core the government is aggrandizing certain products above others, which is antithetical to and a mockery of free enterprise. “Moreover,” Investor’s notes, “the dirty little secret of the electric-car industry is that electric cars are dirty, too, and not necessarily cleaner than regular cars. … A big reason for this is the electric cars’ batteries, the heart of the industry. Many of the batteries are built in high-pollution countries like China, Thailand, Germany and Poland, all of which depend heavily on coal for their energy. So the CO2 produced just in making the electric cars is far greater than for a regular, gasoline-powered car.”

Consider also the primary source from which these batteries are charged — fossil fuels. Or as Investor’s put it, “It’s like someone dumping their garbage on the lawn of a neighbor down the street, while defending their own yard as pristine.” And as far as slashing emissions? Economist Jonathan Lesser says, “The net reduction in carbon dioxide emissions between 2018 and 2050 would be only about one-half of 1 percent of total forecast U.S. energy-related carbon emissions.”

Finally, just like with state and local tax deductions, electric vehicle subsidies principally assist more wealthy individuals due to the bloated costs of EVs that make them unaffordable to most of the middle class. “Wind, solar and other ‘alternative’ energies are near-perfect examples of political cronyism at its worst,” Investor’s concludes. “They produce electricity at outrageously high cost. They aren’t necessarily cleaner or better for the environment than fossil fuels. And they require subsidies to privileged, politically connected groups to exist.”

For these reasons, Trump should pursue subsidy repeal, even if that means waiting until the next election. Now if only we could get him to see the similarities with King Corn…

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