Green central planning—our hydrogen future? — VOICES for REASON

In my last post, I commented on how government central planning, being subject to shifting political agendas, makes long-range economic decision-making impossible. It’s worth looking at other examples of the chaos and market distortions that government intervention causes.

Consider the government’s support for alternative fuel vehicles, which—like the solar power plants in the Mojave desert—is driven purely by green ideology. It currently doesn’t make any technological or economic sense to try to replace the petroleum-powered internal combustion engine with currently existing alternative fuel technologies. (Just as it currently doesn’t make any sense to try to replace fossil-fueled or nuclear-powered electricity with solar or wind.) Nevertheless, the government is determined to do so.

In 2003, the Bush administration launched a 1.5 billion dollar initiative to subsidize the development of hydrogen cars—cars that use hydrogen instead of gasoline as their source of energy, producing water as their only emission.

Now, there are all kinds of reasons why hydrogen cars would never make it today on a free market. Critics cite legitimate safety concerns, the high cost of hydrogen fuel cell technologies, and the need for a huge, nationwide build-out of hydrogen refueling stations. But that, it was argued, is precisely why government intervention is needed to reshape the market, to oversee the development of this technology through the decades it would take for the vehicles and supporting infrastructure to achieve significant market penetration.

There was a lot of Bush Administration fanfare about “our hydrogen future.” There were photo-ops of President Bush refueling the hydrogen tank on a demo model. The big three automakers went into overdrive in their R&D on hydrogen vehicles. Plans were launched to construct a network of hydrogen refueling stations. Etc.

So how’s the Bush hydrogen initiative faring now?

Barely a few months after taking office, Obama killed it. Pointing out the many objections and obstacles to hydrogen as a significant source of transportation fuel, Obama’s energy secretary, Steven Chu announced plans to dramatically slash the funding for the Bush initiative. At a press briefing, Chu said: “We asked ourselves, ‘Is it likely in the next 10 or 15, 20 years that we will convert to a hydrogen car economy?’ The answer, we felt, was ‘No,’” Instead of throwing billions away on hydrogen cars, the Department of Energy under Chu and Obama will throw billions away supporting plug-in hybrids and electric cars, which they “feel” are a better bet.

But when the feelings of the government “Energy Czar”—who changes with every election cycle—is the primary force “shaping” (i.e., distorting) the market, how is any long-range business investment or economic planning by market participants possible? If we want to have any kind of real energy future, what the government needs to do is keep its hands off altogether.

(For more on the failures of central planning in energy and for a glimpse at what a real free market in energy looks like, I recommend Alex Epstein’s excellent article “Energy at the Speed of Thought,” which looks in detail at the market for illumination fuels in the 19th century.)

Photo credit: flickr/eiko_eiko