Romney Energy White Paper Says Get Government Out of the Way, Let Market Determine Winners
Presidential candidate Mitt Romney published an energy policy white paper in late August, titled “The Romney Plan For A Stronger Middle Class: Energy Independence,” with a goal of American energy independence by 2020. While focusing on policies that encourage development of America’s hydrocarbon resources and streamline regulations to bring new energy sources online more quickly, the Romney plan does include renewable sources such as solar and wind in the energy mix.
The paper advocates speeding up permitting processes not just for new oil wells but also for solar, wind and other renewable projects. Under a Romney administration, state and local authorities would be given greater energy regulatory power, with the paper noting, “From oil and gas and coal to wind and solar and biofuels, states are far better able to develop, adopt and enforce regulations based on their unique resources, geology and local concerns.” The paper criticizes the Obama administration for overregulation and allowing “permitting delays, endless reviews and senseless litigation” to “interfere with all forms of energy production,” including “the construction of wind farms and solar plants.”
A U.S. Chamber of Commerce report seems to support Romney’s position. The report, “Progress Denied: A Study on the Potential Economic Impact of Permitting Challenges Facing Proposed Energy Projects,” studied the potential loss in economic value of 140 renewable energy projects (89 wind, 4 wave, 10 solar, 7 hydropower, 29 ethanol/biomass and 1 geothermal) that were delayed or canceled due to regulations or other impediments.
The white paper proposes that the private sector should lead energy development, from oil-and-gas exploration and coal-mining to the siting of wind, solar, hydroelectric and other renewable energy facilities. Romney’s plan prioritizes the revitalization of nuclear power by streamlining the Nuclear Regulatory Commission’s power to approve new sites and license approved reactor designs at those sites within two years.
The paper goes on to note that the same policies that will open access to land for oil, gas and coal development can also open access for the construction of wind, solar and hydropower facilities. However, alternative energy sources, such as wind, wave and solar, would be expected to pull their weight by demonstrating the ability to succeed without subsidies. In an obvious reference to the Obama administration’s willingness to provide hefty taxpayer-funded subsidies to unprofitable alternative energy companies, the paper writes:
Instead of defining success as providing enough subsidies for an uncompetitive technology to survive in the market, success should be defined as eliminating any barriers that might prevent the best technologies from succeeding on their own.
Romney, in essence, is telling any alternative energy company to find its own capital and not to expect government handouts. If an alternative energy company can demonstrate value, the market will reward it, but if it can’t, it better turn things around.
His stance appears to be in step with prevailing thinking in Washington. In January, the New York Times reported that there was “little enthusiasm” for alternative energy subsidies among lawmakers, noting that “taxpayer losses of more than half a billion dollars on Solyndra, a bankrupt maker of solar modules that defaulted on a federal loan, has tarnished the image of renewable power in particular.”
The paper does acknowledge that overregulation and delay tactics have affected development of solar, wind and other renewable energy sources, and notes that a Romney administration would streamline regulations and permitting processes. It cites a Reuters article that said pumped-hydro projects can take decades to get permitted and built — “compared with the difficulties of getting solar projects built, pumped hydro storage is almost impossible.”
But still, based on its plan outline, a Romney administration would probably be perceived as unfriendly to the special interests pushing alternative energy projects that are currently receiving millions of taxpayer dollars in financial support. In keeping with his broadly conservative approach to energy issues, Romney favors letting the private sector and market forces determine energy winners and reducing, if not outright eliminating, many of the subsidies currently doled out to alternative energy companies with connections to the Obama administration.
President Obama’s poor understanding of the private sector has spilled directly into his energy policy, as he sought to have government play venture capitalist and spend billions of dollars subsidizing his chosen companies and technologies. Meanwhile, as companies like Solyndra were going bankrupt and the wind industry was shedding 10,000 jobs, revolutionary innovation in the private sector was paving the way for energy independence and an economic resurgence.
That does not sound like someone who would eagerly give taxpayer money to green energy companies in the hopes that they might someday be able to operate sustainably and profitably. This won’t win the former Massachusetts governor many votes from green lobbyists.
The paper cements its point of letting the market determine winners by citing the famous story, retold by Mike Brownfield in his 2011 Heritage Foundation piece, of how Dr. Samuel Langley of the Smithsonian Institution used a $70,000 U.S. government grant to create an airplane. As Brownfield wrote, it crashed into the Potomac River, “and Langley laid much of the blame on ‘inadequate’ federal funding.” Nine days later, as Brownfield wrote, the Wright brothers succeeded in flying their privately financed airplane.
The message in that anecdote comes through loud and clear.