If you haven’t heard yet, the government is now paying you to live green. It’s not just the feds either—state and local governments are also offering all kinds of incentives for people who want to help out with their carbon footprint. We’re talking tax breaks, credits, and even straight cash payments for things like driving an electric car or electrifying your home with alternative energy. You can even get a subsidy for taking public transit.
Look, we all want to live in a clean world. And I’m actually a fan of a handful of green energy companies. I recommend one in my Smart Investing service, one of the few companies that can hold a competitive edge against the juggernauts in the oil sector.
But I don’t think policies like these are the best way to support the green energy sector. First of all, the people receiving some of these subsidies are already rich, the folks who can already afford to go out and purchase a $75,000 battery-operated Tesla (TSLA).
I think it’s ridiculous that the government can take our tax money and pay someone else to get a luxury car—up to $7,000 in places like California. It’s why many are complaining that this policy is just another wealth transfer to the rich.
The other side of this revolves around the government funding green energy startups. We’ve seen huge multi-billion dollar solar energy projects rise up and then flop miserably—just look at Solyndra, the solar panel manufacturer that received a $545 million loan from the Department of Energy and less than five years later had already gone bankrupt, leaving over a thousand employees out of work.
The rate of failure for subsidized companies like Solyndra is twice as high as regular startups. You just can’t keep pumping money into companies when they’re failing like that.
Plus, the price of solar photovoltaic cells has dropped 99% in the past quarter century. That brings solar power very close to grid parity, meaning it can generate power at an equal cost of purchasing power from the electricity grid.
In other words, it’s time green energy companies start to stand on their own two feet instead of the government placing that burden on taxpayers. The administration has poured billions of dollars down this hole, and it’s just not working.
Germany was hailed as a leader in green energy when it ham-handedly forced wind and solar energy onto its grid… and now Germany has the highest energy prices in Europe.
Let’s not make the same mistakes, or take my word for it, American consumers will suffer.
