Should the government pick energy winners and losers?

Today I attended a program sponsored by The National Review Institute on energy production and national security. The participants were: (1) Larry Kudlow (moderator), (2) Congressman Mario Diaz-Balart, (3) David Hamilton of the Sierra Club, (4) our friend Steve Hayward of AEI, (5) Andrew Liveris, CEO of Dow Chemical, and (6) James Woolsey, former director of the CIA. Hamilton, Woolsey and Liveris all advocate government action, including the manipulation of incentives, to promote “green” sources of energy and destroy oil’s dominance. Diaz-Balart, Hayward, and especially Kudlow all expressed serious reservations about such a course of action.
Kudlow asked the key question: why not let the market decide, instead of having the government pick winners and losers? Liveris’s answer was “climate change.” That prompted Kudlow to raise two more questions: (1) how sure are we that man’s actions are causing climate change and (2) even if we’re quite sure, what reason is there to believe that trying to accelerate the movement away from traditional energy sources will have any meaningful impact in stemming global warming.
For me the second question is particularly salient. The Sierra Club’s Hamilton was not sanguine that even the course he advocates will have any meaningful impact. His view is that “nature needs to give us a break” if we’re to avoid a global warming induced catastrophe, but that we should adopt his environmentalist measures in order to be in a position to take advantage of the break if we get it. Yet it seems unclear that, in the context of a global economy, an accelerated movement to green energy in the U.S. would put the world in a materially better position in this regard.
Woolsey had an additional answer as to why the government should not be entirely neutral as among energy sources — national security. He argued that terrorism and global instability put a premium on, if not energy independence then at least energy resiliency. Hayward noted, however, that we’re already becoming considerably more energy resilient, and Woolsey suggested that his favorite idea, the plug-in car, won’t need very much help from the government.
Ultimately, I don’t believe the case for significant government intervention was successfully made today. However, it seemed clear that, particularly in light of climate change and national security concerns, the government should not tilt in favor of traditional energy sources, as it now does to some extent.
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