sierraclub.org - sierra magazine - march/april 2011 - taking the initiative

TAKING THE INITITIVE

By Carl Pope

PICK A WINNER
What if we subsidized clean energy instead of coal and oil?

An ingenious feature of the U.S. right wing is its success in making public policies that were perfectly reasonable yesterday anathema today. Single-payer healthcare, for example, which works fine for Medicare, wasn't even on the agenda in last year's healthcare debate. The cap-and-trade approach to addressing climate change, once a "free market" strategy championed by Republicans, is now demonized as "cap-and-tax."

And whenever someone suggests that the U.S. government promote clean-energy technologies—electric cars, wind turbines, advanced biofuels—through tax credits or loan guarantees, critics complain that it would amount to an "industrial policy" in which the government "picks winners and losers."

The reality is that the United States already has an industrial policy that picks winners and losers—mostly the wrong ones. The big winners are banks, drug companies, investors, and farmers of corn, cotton, wheat, sugar, and soy. The losers are manufacturers, both low-wage (textiles) and high-wage (electronics).

Nowhere does the government pick favorites more than in the field of energy. Power utilities, for example, profit when they encourage you to waste electricity; only a few states reward them for helping you invest in using less. A coal-burning power plant pays lower property taxes than would a solar replacement. A huge chunk of the federal defense budget—more than $100 billion a year, according to the National Priorities Project—goes to protecting the oil industry's access to foreign petroleum. If the next disastrous oil spill is from a small drilling company, taxpayers, not the oil industry, will be stuck with the bill. If a solar or wind company planned to destroy streams, it would never get an operating permit; coal companies, however, get away with burying streams all the time. For the eight years of the Bush administration, enforcement of the Clean Air and Clean Water Acts was effectively suspended, allowing the coal industry to impose, via its pollution, another $100 billion in costs on the U.S. economy in the form of healthcare.

In most states, public utilities still have monopolies. As a result, they can borrow money much more cheaply than energy innovators can. In some states, ratepayers can be charged in advance for coal and nuclear plants—even for those that are never finished. No clean-energy technology gets that kind of deal.

This is an industrial policy, but it's a backward-looking one that greases the skids for dirty energy and vastly increases the federal deficit. Oil imports alone cost us about $300 billion a year. Also, from 2001 to 2008, 2.4 million U.S. jobs were exported, especially low-wage manufacturing jobs like those in textile factories. The loss of U.S. manufacturing means that we import most of our consumer goods from China—that's the other half of America's trade deficit.

But wages are only part of the picture; high-wage Germany and Japan are major exporters of manufactured goods. (In computer-chip-fabricating plants, for example, wages account for only 10 percent of total costs.) What drives manufacturing overseas are unfair tax, energy, and trade policies. Voices as disparate as former Intel chief Andy Grove, United Steelworkers president Leo Gerard, outgoing Pennsylvania governor Ed Rendell, and General Electric CEO Jeffrey Immelt have all spoken out against the covert industrial policy that protects oil, coal, banks, agribusiness, and drug companies and lets the rest of America steadily fall further behind.

Can we fix it? Yes, but it won't be easy. Consider that after the Supreme Court allowed major corporations to pour unlimited cash into campaign ads, two industries dwarfed all others in taking advantage of their new power: big oil and banks. The "winners" in our current industrial policy intend to remain so.

CARL POPE is the chairman of the Sierra Club. E-mail carl.pope@sierraclub.org; read his blog at sierraclub.org/carlpope.