Do Politicians Understand What Drives Efficiency?
Nicolas Loris /
Sen. Rob Portman (R-Ohio). (Photo: Bill Clark/CQ Roll Call/Newscom)
In a Forbes magazine op-ed last week, Sen. Rob Portman, R-Ohio, touted his Energy Savings and Industrial Competitiveness Act as a way to promote energy savings and American competitiveness. His legislation may be well-intentioned, but it fails to recognize free markets accomplish these objectives best when the federal government does not “help.”
Families and businesses do not need taxpayer-funded incentives or rewards for energy-saving behavior. The private sector has made remarkable strides improving energy efficiency. In fact, energy efficiency per real dollar of gross domestic product has improved dramatically over the past 60 years in all sectors of the economy – commercial, industrial and residential. And the government’s Energy Information Administration projects reduced energy intensity well into the future.
When savings outweigh costs, businesses are more competitive and families pay less for energy. Portman wonders whether we can make these decisions on our own. He writes that ESIC “connects manufacturers with energy efficient suppliers, allowing them to maximize efficiency gains that then benefit us all through lower energy costs and cheaper goods.”
Specifically, the bill purports to improve transparency, direction and collaboration in the Department of Energy’s Advanced Manufacturing Office, which provides grants to companies to improve manufacturing efficiency. Taxpayers provided tens of millions of dollars to automotive and chemical companies that have huge market capitalizations and, in some cases, spend more than $1 billion per year on research and development. If Congress wants to provide effective direction to the energy markets, it should eliminate this egregious corporate welfare program.
ESIC also would institute a rebate program for manufacturers of electric motors and transformers. If manufacturers believe purchasing more efficient electric motors or transformers will help businesses lower costs and gain a competitive edge, why do they need taxpayer-funded rebates to make those investments?
Portman pitches the legislation as a pro-market, pro-decentralized-decision-making measure. But handouts for manufacturers are not free market. Nor are the subsidized workforce training programs or forcing energy efficiency into mortgage appraisals.
Furthermore, the bill authorizes $200 million of taxpayer money to “incentivize and assist” states and tribal groups to meet allegedly voluntary building codes. A big part of the definition of “volunteer” is not getting paid to do it. On top of that, the federal government already has provided billions of dollars in taxpayer money to dole out to states for efficiency improvements.
Sen. Portman writes, “Rather than instituting expensive, indefinite federal subsidy programs that benefit particular industries or technologies and distort the market, ESIC puts power in the hands of American businesses and American consumers.” Yet, a few sentences later he boasts about the 270 businesses and trade associations that support the legislation. And this legislation won’t benefit special interests?
The one point of agreement with Portman’s op-ed is with provisions that aim to reduce energy use within the federal government, where incentives to save money and improve efficiency do not now exist.
This legislation is no different. It’s a federal government interventionist and handout wolf in allegedly voluntary, market-based sheep’s clothing.