Innovation vs. Mandates in the Energy Industry

Energy: technology and free markets beat mandates

The Hill, May 4, 2016

Bill Gates is the latest prominent thinker to suggest that it is wrong to achieve our clean energy goals with a carbon tax, or even greater government intervention in the energy marketplace. Gates believes we would be better served by focusing on the energy supply side. In other words, we need to encourage innovation to make clean energy cheaper and better so that it can win on its own without government support. He’s absolutely right.

Government meddling in the marketplace, be it punishing emissions regulations or state renewable portfolios, have cost consumers dearly but achieved little. Even with tens of billions in taxpayer subsidies, wind and solar power still meet just 5 percent of our electricity demand. Conversely, innovation in the energy sector has already produced significant results. Consider the shale gas revolution.

The innovative combination of hydraulic fracturing with horizontal drilling has turned the U.S. into the world’s largest natural gas producer, slashed domestic natural gas prices and, in just a few years, reshaped the nation’s electricity generating mix.

In 2005, coal generated more than 50 percent of the nation’s power. Today, with utilities shuttering older coal plants or converting existing units to burn natural gas, coal generates about 30 percent of our power. This year, for the first time in U.S. history, natural gas is set to generate a larger share of our electricity than coal.

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