President Obama traveled to the Massachusetts Institute of Technology today to deliver a speech on climate change. Part of the speech focused on innovation and the benefits of entrepreneurial risk taking while the other focused on government investments for renewable energy and the importance of climate change legislation. There was both good and bad parts of President Obama’s speech.
“Dr. Moniz is also the Director of MIT’s Energy Initiative, called MITEI. And he and President Hockfield just showed me some of the extraordinary energy research being conducted at this institute: windows that generate electricity by directing light to solar cells; light-weight, high-power batteries that aren’t built, but are grown — that was neat stuff; engineering viruses to create — to create batteries; more efficient lighting systems that rely on nanotechnology; innovative engineering that will make it possible for offshore wind power plants to deliver electricity even when the air is still.
And it’s a reminder that all of you are heirs to a legacy of innovation — not just here but across America — that has improved our health and our wellbeing and helped us achieve unparalleled prosperity. I was telling John and Deval on the ride over here, you just get excited being here and seeing these extraordinary young people and the extraordinary leadership of Professor Hockfield because it taps into something essential about America — it’s the legacy of daring men and women who put their talents and their efforts into the pursuit of discovery. And it’s the legacy of a nation that supported those intrepid few willing to take risks on an idea that might fail — but might also change the world.”
President Obama is right in that innovation and the entrepreneurial spirit is largely why the United States’ economy is what it is. These innovative technologies could eventually save Americans a lot of money on their energy bills. But it also goes to show how far away some of these technologies are from commercialization, which means they may not be able to hit the market yet without help from the taxpayer. When it comes to basic research and development, government funding may be prudent, but after that, it should be left for the market to determine whether or not these innovations will be successful. And even much of the research and development stage, including MITEI, is privately funded.
Let’s not forget, however, that wind, solar and biofuels aren’t new technologies and have been subsidized by the government for decades and still only provide an insignificant fraction of our energy supply. The reason they’ve been subsidized for such a long period of time is that they simply can’t compete but that shouldn’t stop American ingenuity. It should stop subsidies for failed projects. If private investors want to step up and continue to fund these projects, it’s their money. They can spend it how they please.
And this is where the President’s speech takes a wrong turn:
“That’s why the Recovery Act that we passed back in January makes the largest investment in clean energy in history, not just to help end this recession, but to lay a new foundation for lasting prosperity. The Recovery Act includes $80 billion to put tens of thousands of Americans to work developing new battery technologies for hybrid vehicles; modernizing the electric grid; making our homes and businesses more energy efficient; doubling our capacity to generate renewable electricity. These are creating private-sector jobs weatherizing homes; manufacturing cars and trucks; upgrading to smart electric meters; installing solar panels; assembling wind turbines; building new facilities and factories and laboratories all across America.”
But the green stimulus, free lunch rhetoric neglects the costs, both real and opportunity costs, that come with a government stimulus. Heritage analyst Ben Lieberman writes that a green stimulus is actually a contradiction in terms: “Support for renewables would likely cost more jobs than are created. For example, subsidies for wind and solar energy would, at least from the narrow perspective of the wind and solar industries, create new jobs as more of these systems are manufactured and installed. But the tax dollars needed to help pay for them cost jobs elsewhere, as would the pricey electricity they produce.”
Our analysis of the Waxman-Markey cap and trade bill finds that there will be 1.9 million fewer jobs by 2012 after accounting for green jobs. Job losses would grow to 2.5 million by 2035. This makes us a cap and trade naysayer, who Obama attacks towards the end of his speech:
“The naysayers, the folks who would pretend that this is not an issue, they are being marginalized. But I think it’s important to understand that the closer we get, the harder the opposition will fight and the more we’ll hear from those whose interest or ideology run counter to the much needed action that we’re engaged in. There are those who will suggest that moving toward clean energy will destroy our economy — when it’s the system we currently have that endangers our prosperity and prevents us from creating millions of new jobs. There are going to be those who cynically claim — make cynical claims that contradict the overwhelming scientific evidence when it comes to climate change, claims whose only purpose is to defeat or delay the change that we know is necessary.”
We’re naysayers because we believe the huge costs of this bill far outweigh the negligible environmental benefits. On top of the job losses we project that: Cumulative gross domestic product (GDP) losses are $9.4 trillion between 2012 and 2035; Gasoline prices will rise by 58 percent ($1.38 more per gallon) and average household electric rates will increase by 90 percent; And a typical family of four will pay, on average, an additional $829 each year for energy-based utility costs. We’re cynical for a reason.
If MIT students wanted to listen to a real expert on climate change, perhaps they should have gone with one of their own: Richard Lindzen.