Why the Government Shouldn't Back Alternative Energy

The government has quite a bit of egg on its face after the Solyndra debacle. Yet it’s not just one venture that’s the problem. For more than a decade, the U.S. government has been pouring money and easy loans into the alternative energy space. The government has no reason to be in the alternative energy space, and no business meddling in a market that works very well on its own.

The fact of the matter is that the government likes to back losing propositions. Private businesses and industries don’t have that luxury. They have to pay attention to actual market needs and serve real, honest-to-goodness customers on a day-in, day-out basis. The last thing they need is the government telling them to support projects customers don’t want and will never buy.

Stand Alone Success

Alternative energy sources receive considerable attention from private industry. No one needs to design a special seminar to convince business leaders and families that energy costs are rising and new power sources need to be found. We live that reality everyday. We fill our cars with expensive fossil fuels, heat our homes with pricey electricity, and power our factories with costly generators. As a result, we actively seek better answers.

Companies like Solutions From Science are continually seeking those better answers. Yet we don’t rely on artificial stimulation to force pet projects on an unwilling public. Instead, we’ve used market forces to drive development and innovation. The result is a catalog of top-notch alternative energy products that are 100% subsidy-free.

Failures & Flops

Government doesn’t seem to understand that basic market forces are enough to drive the alternative energy market. The know-it-alls in Washington have their own agendas that they want to push. Those agendas are driven by lobbyists and special interests, and they generally lead to failure and costly flops.

One example of this is an Obama Administration favorite, the battery-powered car. Ener1 Inc., a lithium-ion battery maker, has received $118 million in grants. President Obama has mentioned the company in speech, and Vice-President Joe Biden toured one of the company’s factories in January 2011, calling it proof that the government is backing job-creating industries.

Unfortunately, the company lost $165 million in 2010 through a series of bad investment decisions and low demand for its products. Even with lots of love from the government, consumer demand for battery-powered cars isn’t even predicted to reach one percent of the market until 2018. In fact, by 2015, the supply of batteries for cars is estimated to be double the number of cars able to take them. No wonder Ener1 and its brethren are going bust – they’ve outpaced their market at the government’s demand, leaving taxpayers on the hook for major losses.

Just Walk Away, Please!

Clearly, the government doesn’t know what it’s doing when it comes to the alternative energy markets. For some reason, the team of geniuses in Washington think we’ve all got extra money to push into dead-end projects, underwriting products that don’t have a market at the end of the assembly line. However, it just creates more pain for the economy and misdirects valuable funds in tight times.

The Obama Administration likes to think its doing the country a favor and helping the employment situation. Lured in by false lobbyist promises of jobs – Ener1 was supposed to at 1,700 jobs in Indiana by 2012, but currently only has 248 – the government keeps throwing good money after bad.

It’s time for the federal government to stop and walk away. Market forces are already capable of pursuing high-quality alternative energy products. We don’t need government officials trying to steer the market in a new direction with loser companies like Solyndra and Ener1. We just need the government to stop funding disasters and let the truly viable sections of the alternative energy market rise to the top.