President-elect Joe Biden recently nominated former Michigan governor Jennifer Granholm to lead the Department of Energy, and she will be charged with overseeing America’s energy markets. This position might not garner the same level of media attention as other prominent cabinet secretaries, but with Mr. Biden’s promise to aggressively tackle climate change, the DOE could become one of the most consequential positions in the administration.
With Ms. Granholm at the helm at DOE, she will be charged with protecting the energy grid, tackling climate change, and promoting investments into clean energy. DOE ought to focus on free markets and limited government to get to those goals. The last thing American taxpayers, businesses, and consumers need during this period of economic uncertainty is more government regulation and favoritism.
If past is prologue, however, taxpayers have legitimate reasons to be concerned; given Ms. Granholm's track record with corporate cronyism and wasting taxpayer dollars. During her eight years as governor, according to the Wall Street Journal, Ms. Granholm handed out hundreds of millions of dollars to politically favored startups to create “green jobs.” Examples include $125 million in tax credits for a green energy company that went bankrupt, $20 million for a “green” manufacturing plant that was never constructed, $100 million for a renewable energy park that was scrapped, and many others.
Instead of focusing on doling out taxpayer dollars, Governor Granholm should have used that money to provide actual tax relief for businesses. That approach would have been fairer and more effective in creating jobs both in the green energy sector and the broader economy.
We hope Gov. Granholm has learned that government subsidies are rarely a long-term job creator. Unfortunately, it doesn’t look promising. In a recent statement by incoming Senate Environment and Public Works Chairman Tom Carper (D-DE), he stated “Governor Granholm has the strategic vision to unleash a clean energy future in our country.” No doubt taxpayer dollars and government involvement will play a crucial role in this “strategic vision.”
Using handouts to specific companies and distortionary subsidies to sway markets is wrong. Our organization has long fought against efforts to give the federal government an excessive role in the country’s delicate energy markets. When the Trump administration sought a plan to bail out struggling coal and nuclear power plants in 2018, we were on the front lines against such a plan. At the time, we called this multi-billion dollar swampy scheme “the epitome of corporate cronyism and an unprecedented interference by big government into America’s energy market.” The plan was so widely panned we were joined by an array of environmental, consumer, and taxpayer groups against such a flawed idea.
It’s certainly possible a similar situation could arise under the Biden administration, and perhaps instead of coal and nuclear, the federal government would attempt to prop up struggling wind and solar companies. Conservatives were rightly dismayed at the 2011 Solyndra scandal which wasted hundreds of millions of taxpayer dollars which were supposedly going to boost green energy jobs. The Solyndra failure was a textbook example of the pitfalls that exist when the federal government tries to pick winners and losers in the energy industry.
Using the federal government as a piggy bank for pet projects for green energy programs, grants, or tax credits would put the federal government in the middle of both America’s energy markets and investment markets. The heavy hand of government should not favor one sector of industry over another, whether it be subsidies for coal and oil, or subsidies for wind and solar.
The free market works well as long as the government doesn’t meddle. Moreover, competition in free markets has benefited all consumers by lowering energy costs for ratepayers. But as is usually the case, when the government intervenes in the market it creates distortions which benefit a select few at the expense of everyone else.
Taxpayers and everyday Americans can look forward to Ms. Granholm’s confirmation hearing this morning so we can learn more about how she plans to lead the department: will she lean on the proven model of the free market, or implement unproven Green New Deal-style regulations? Let’s hope she’s learned from her past mistakes and will pursue broad-based policies to ensure Americans have access to affordable, reliable and safe energy.