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Hot-Potato Policy

DOE loan guarantees degenerate into a political game.

Fortnightly Magazine - December 2007

If you’re looking for poison pills, the subsidy is likely to be one.”

Maybe poison is just what’s needed. After all, if DOE doesn’t like what Congress wants it to do, maybe that’s because it recognizes something Congress doesn’t want to face. Namely, whether it’s betting Treasury dollars or full-faith-and-credit chits, the U.S. government is lousy at picking winners and losers in the innovative-technology game.

The fact is, no loan-guarantee program can spur the broad, systemic changes necessary to accomplish Title XVII’s implicit purpose. If members of Congress really want to encourage investment in innovative energy technologies, they should enact greenhouse-gas constraints that reflect the true costs of carbon emissions. At the same time, DOE should assert some leadership and analyze the country’s energy and environmental strategies in the bigger context of U.S. economic, trade and foreign policies.

The industry will respond much faster, and much more efficiently, to policy leadership and clear economic signals than it will to any kind of hot-potato investment program.