Todd Wynn

Renewable Energy Via Freedom, Not Force

By Todd Wynn

This article was published as a guest column on EarthTechling.com.

Many believe the free market and renewable energy are at odds. Renewable energy advocates proclaim fossil fuels will continue to dominate the energy landscape, even if consumers perceive them to be rife with environmental issues. This belief has driven political leaders to subsidize renewable energy development, mandate utilities to provide renewable energy options, and force citizens to purchase them. The free-market stance looks at the situation differently.

Renewable energy can become a major player in the energy market even without the heavy hand of government. It isn’t a novel approach: Renewable energy should expand according to voluntary consumer demand. In fact, a perfect analogy already exists.

Renewable energy is to the electricity sector as organic foods are to the non-organic food sector. Consumers perceive organic food to be healthier for them and better for the environment, yet it costs more – just as renewable energy does. Yet, organic food and beverage sales continue to grow each year in the United States.

According to the Organic Trade Association, organic food sales reached $24.8 billion in 2009, up 5.1 percent from 2008. This was accomplished without restrictive government mandates or generous corporate handouts. Organic food has done fantastically in the free market, even at a price premium. Consumers value the product and are willing to pay for it.

We have the same choice with the electricity we purchase. Most utilities offer “green power” programs which allow ratepayers to pay voluntarily for renewable energy at the higher cost. This is the free-market approach to financing and expanding renewable energy without forcing unnecessary costs on the entire population. Just as with organic food, customers who value the “product” can purchase it at a premium. Those who don’t value it should not be forced to pay for a minority’s ideology or preferences. In Portland, voluntary green power program participation rates are above 10%. This is higher than the state’s mandated renewable energy goal for 2010.

The free-market path for renewable energy preserves freedom and choice while growing the industry according to real demand. It is expanded without the use of force. It thrives because ratepayers value the environmental benefits that are proclaimed to exist. Ultimately, the renewable energy market should thrive (or not) on its own through voluntary purchases. The free market has worked for organic food; it will work for renewable energy as well.

14 thoughts on “Renewable Energy Via Freedom, Not Force

  1. Dear Mr. Wynn,

    The analogy of renewable energy to organic food is a good one, but I am not sure that it is an 100% match. The fundamental difference is that consumers care more about their health than the environment, and therefore, more about organic food than renewable energy. This is based on the economic theory of utility. The health of their body just matters much more than the health of the earth to average citizens when they come to the decision of spending the limited financial resources on benefiting their own health or the health of the Earth.

  2. Todd, I think the most frustrating part of the renewables drive is the politicians and activists pushing it don’t seem to appreciate the extremely high capital costs of renewables, focusing only on the energy component of the economy which amounts to only about 10% of all domestic production. Spain pursued the Green without regards to capital cost, and now their economy is in shambles having gone deep into debt while only making a dent in their fossil fuel consumption.

  3. If you believe in a free-market capitalistic economic system, then those who advocate CO2 forces manmade global warming should both be able to see this is a win-win situation. As Thomas Jefferson once said:
    To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.
    Thomas Jefferson

  4. However, Mr. Wynn’s larger argument – that citizens should not be forced to purchase some product or pay into some system because it matches with a trendy (or even majoritarian) ideological stance – is related to a much more fundamental theory of governance: Liberalism.

    Liberalism (not in the trendy sense of the word) is the foundation of American governance, and with it comes the ability to make decisions of our own accord, based on our personal mores, values and principles and the rational decisions from which they are derived.

    Your argument that people will not opt in to green energy programs unless they are forced to is, quite frankly, an embarrassment to the movement. Are government mandates really the only reason we should participate in such programs?

    If you don’t have the time to convince people of the real benefits of voluntarily opting into green programs, and you are going to rely on the government to mandate it for you, you are neither an environmentalist nor an activist, but a politician, and a shady one at that.

    As an environmental activist, I am ashamed that so many people that claim to be a part of this important movement refuse to actively participate in it by encouraging real change and instead whine to politicians to push costly programs that actually hinder progress.

  5. Mr Wang, I’d be interested in knowing if organic foods are more than 10% of the local market for foods, I suspect not. Todd, this is valuable analogy, it will be interesting to watch and see what happens with “green power” optional purchases over time, as the RPS goes to 25% in just 15 years. Between Federal 30% subsidies, state BETCs and consumer purchases of “green power” options, and guaranteed levels of profit, utilties are not struggling to meet the state mandates, that’s for sure.

  6. I wholeheartedly concur, Todd. The government should be spending its money on improving the grid, mandating a portion of energy production from renewable sources, not handing out subsidies. We consumers have shown a growing willingness to pay a little bit money more for energy from renewable sources than traditional fossil fuels. …The holy grail for renewable energy, by the way, is storage.

  7. Todd, I’m sure that you realize your essay is incomplete.

    First, you didn’t note that the fossil fuel industry also receives enormous subsidies from government – about $30B/yr last time I looked. Not to mention another trillion dollars or two to fight the Iraq War to ensure our continued oil supply and the industry’s profit.

    Secondly, you didn’t mention the enormous external costs of fossil fuels. They cost an estimated $120B/yr in health expenses, according to an NAS study (NY Times, 2009, http://is.gd/gsvWa). About 20,000 people/yr die early from fossil fuel pollution. And that is besides the cost of climate change.

    Where are these factored in the “free” market? It is not nearly as free as you imply.

  8. David,

    Come on now…really?

    You must understand the concept of standardizing subsidies.

    44 cents per unit of energy for coal, 25 cents for natural gas versus 25 dollars for wind and solar. This is 50 to 100 times the subsidy. Not that fossil fuels should be subsidized but stop lying to people.

    Next, we are talking about renewable electricity! Last time I heard we are not having a war in iraq over coal and we produce less than 1% of our electricity from petroleum.

    Get your energy facts straight!

  9. I would like to address a few points that have been brought up.

    First, the essay is incomplete. There are so many more problems with government intervening in the energy market that it would take me thousands of pages and hours to describe them all in detail. I followed a word limit given by the editor of Earthtechling.

    Second, often when I discuss subsidies, someone chimes in with a response that fossil fuels receive subsidies. This is true. I believe that fossil fuels should not receive subsidies either. Two wrongs never make a right. Let’s pull back layers of government without trying to use government to “solve” a government-created problem. Subsidies need to be understood better. They need to be standardized to understand the true level of subsidies for different energy forms. For an energy source that barely exceeds one percent of electricity output in the U.S., wind subsidies are $23 per megawatt hour (solar is on the same level). This is around 60 times that of the $0.44 per megawatt hour that go to the foundation of US electrical power output, coal. It is 100 times the $0.25 per megawatt hour that go to natural gas. Coal and natural gas account for over 70 percent of US electrical power supply.

    Third, some have stated that polls show that a majority support renewable energy. Well, if people truly support wind and solar power, then why do we need a mandate at all? If people truly value wind and solar power, then they will be willing to pay the real price, not just the subsidized price.

    Even if you assume that the majority of Americans truly value renewable energy, it does not justify forcing a minority of the population (who do not value these forms of power) to pay for it. It is no more moral to force this minority to subsidize renewable energy than it is to force environmentalists to subsidize coal and fossil fuels. Our republic was set up to protect personal freedoms of all, including the minority. So the majority should not attempt to force its views and values on everyone else, otherwise we will have another tyranny of the majority.

    Fourth, some have brought up that the perceived benefits of organic foods are local, while the perceived benefits of renewable energy are global, meaning that there is less of an incentive to purchase renewable energy. This is an interesting thought, but it fails to acknowledge that many hold deep-seated values that cause them to give directly to many causes that have little or no local impact. (Need I remind you of the millions of dollars in aid that Americans voluntarily pour out every time there is a major natural disaster in the far reaches of the world). It is also interesting to note that organic food has a smaller market penetration (around 1%) than voluntary participation in renewable energy markets. This may very well indicate that although there is a direct supposed health benefit of organic food consumption, the perceived benefit of purchasing renewable energy (solving climate change, feeling good about using wind power, etc) is as high if not higher, particularly in Portland area with a 10% participation rate for voluntary renewable energy purchases.

    Fifth, some assert that this commentary or Cascade’s views on the environment or renewable energy indicate that we do not care about environmental pollution and that everyone should be able to pollute without government intervention. Just because we at Cascade believe in choice and personal freedoms does not mean we believe in violating property rights. This is a common fallacy. The government and our Republic exist to protect property rights. This includes environmental injustices. Protection of property rights and voluntary markets are what can address almost any conceivable environmental problem. Additionally, we believe that an increase in personal freedom and de-regulation will also increase the ingenuity and entrepreneurship that has brought about other amazing inventions that solve many pollution and environmental problems.

  10. Government should not force it’s citizens to purchase green tech or green produced electricity. When I moved to Phx AZ in 1989 I found the electric rates to be almost 300% higher than I was use to. So I did go down to the local home improvement store & purchased enough CFLs to replace the lights in my apartment. Using a bulb that consumed 1/5 of the energy as well as generating less heat was a good choice at the time.

    I find it interesting that I am still using some of the bulbs 21 years later. Yet most of the CFL bulbs I have purchased in the last 7-10 years have failed. The prices of CFLs have gone up over the years. And the quality of CFLs has plummeted over the years. But why should the Chinese company care about quality of it’s product when the government of the United States of America is mandating it’s citizens purchase their product.

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