Free Markets, Free People

Bill Gates lays out ground truth on energy subsidies

I don’t think I have to remind regular readers here that I’m not a fan of subsidies – any kind of subsidies.  That being said, and the fact that despite my desires, we seem bound and determined – or at least our politicians are – to subsidize “green energy”.

Gates lays it out for our big government greenies in a way that at least would send subsidies to the right place vs. how they’re being planned as we speak.

There’s the “right way” (again disclaimer in place) and, as Gates puts it, the cute way (aka the “wrong way”):

If you’re going for cuteness, the stuff in the home is the place to go. It’s really kind of cool to have solar panels on your roof. But if you’re really interested in the energy problem, it’s those big things in the desert….despite often-heard claims to the contrary, ethanol has nothing to do with reducing CO2; it’s just a form of farm subsidy. If you’re using first-class land for biofuels, then you’re competing with the growing of food. And so you’re actually spiking food prices by moving energy production into agriculture. For rich people, this is OK. For poor people, this is a real problem, because their food budget is an extremely high percentage of their income. As we’re pushing these things, poor people are driven from having adequate food to not having adequate food…

You could have the government throw money at the most politically favored guy in the country to go build a battery factory. And there are billions of dollars that have been assigned to that waste…. I think people deeply underestimate what a huge problem this day-night issue is if you’re trying to design an energy system involving solar technology that’s more than just a hobby. You know, the sun shines during the day, and people turn their air conditioners on during the day, so you can catch some of that peaking load, particularly if you get enough subsidies. It’s cute, you know, it’s nice. But the economics are so, so far from making sense. And yet that’s where subsidies are going now. We’re putting 90 percent of the subsidies in deployment—this is true in Europe and the United States—not in R&D. And so unfortunately you get technologies that, no matter how much of them you buy, there’s no path to being economical.

So he’s right – it’s R&D where money should be going, not picking winners and losers all while disrupting markets and punishing poor people because government is economically ignorant of markets.

The unfortunate part about the Gates statement is it accepts subsidies as a good thing even if misdirected.

Apparently how he gained his billions was because government somehow subsidized it in some ways.  No markets.  No venture capitalists seeing a good idea, visualizing a market for it and funding the research necessary to cash in on it.  

Nope, gotta have subsidies and all the negative effects it brings to the markets I guess.

Anyway, he’s right about the meta-picture – if we want to get serious about “green energy” then R&D is where the game is now.   Not “deployment” as Gates calls it – the stuff is not ready for prime time.

Oh, and government?  Get out of the freakin’ way, will you?  The government is so scared that someone will make billions off of a good idea in a free market that they’ve invented this myth that the job is just too big for private markets.


Get out of the way.


Twitter: @McQandO

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4 Responses to Bill Gates lays out ground truth on energy subsidies

  • I wonder, should someone in the future assess the costs and benefits of our flirtation with Collectivism, just how huge the damage number will be.
    The assessment would be daunting, as there are so many ways stupid stuff ramifies, even in very unexpected ways.
    I favor a return to a more rational mode, where people make decisions with what they own, and use what they chose to purchase, since I believe in people left at liberty.  The greatest “cloud computer” ever known.

  • McQ[G]overnment is economically ignorant of markets.

    I suggest that it’s not ignorance: it’s that the politicos just don’t care when it comes to feathering their own shoddy nests.  “Oh, ethanol production is enegy-inefficient AND raises the price of food?  Who cares!  I need those farm state votes!”

    [D]espite often-heard claims to the contrary, ethanol has nothing to do with reducing CO2…

    I am often bewildered by this belief: whether one burns wood, coal, gasoline, diesel, ethanol, or anything else, one is still BURNING carbon, which generates CO2.  The only “benefit” to burning ethanol is that it is a renewable resource, albeit a poor substitute for gasoline and coal for most purposes due to its rather lower energy density.

  • You have to remember that Bill is now a super rich businessman.  He probably automatically thinks of government in business terms.  He is saying basically that “They have this money…” (and he is thinking in terms of profit, not taxes) “that they need to put to good use.” (he is thinking in terms of reinvesting in the company)  “Now were is the best place for that money…. Long term R&D!  We need to think of new ways of doing things rather than deploying the old on a grand scale.”
    That in itself is not a bad idea, even to do with tax dollars.  (D)ARPA and NACA both come to mind.  However, what we don’t want and are building anyway is NASA.  Bloated, slow, risk adverse, and hasn’t had a new idea in 35 years.

    • Now we have MASA…Muslim Approach and Sensitivity Administration.
      Bet we get very little R&D from that.  Unless you mean Retrograde and Dhimmitude.