Green Investments Yield Little ‘Green’

An article in the Sept. 28 edition of MIRS Capitol Capsule (subscription required) correctly characterized Gov. Jennifer Granholm as "the best friend alternative energy and electric plug-in vehicles have ever had in Michigan." The article features remarks praising the governor from a number of companies that benefited from the selective tax breaks, subsidies or other policies her administration has presided over. The government-favor recipients also express hope that the next administration will keep the goodies flowing.

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"We think [electric plug-ins] are going to be the future for Michigan's automotive industry," said David Joos, president and CEO of Consumers Energy. DTE boss Tony Earley lauded Granholm for "getting us in the right direction" with the tax incentives. Both companies were also the beneficiaries of a remonopolization bill the governor signed, unraveling a limited electricity competition regime her predecessor put in place.

Representatives from Ford and General Motors praised the Legislature's passage of hundreds of millions of dollars in state subsidies for electric car battery makers.

A different note was sounded this week at the Custom Integrated Circuits Conference in San Jose, Calif., however, where a former beneficiary of similar subsidies showed that he has removed the rose-colored glasses: "The high cost of batteries will keep pure electric vehicles such as the Nissan Leaf and Chevy Volt out of the mainstream consumer market," said Ian Wright, the co-founder of Tesla Motors, maker of the first (and so far only) modern electric cars.

"Today's Chevy Volt is well designed, but will cost about twice as much as a similar gas vehicle," Wright said in what was the keynote speech to the gathering. "Gas prices will have to soar above $10 per gallon to make such consumer EVs economical even at the lower battery costs."

Wright believes that electric vehicles will remain only a "niche" market, "We can't even afford to fix potholes in the road, so where are we going to get trillions for battery charge stations?" he asked. "The economics don't work without massive subsidies."

Nevertheless, for more than four decades politicians, subsidy-seeking crony-capitalists and media elites have been promising revolutionary benefits just around the corner from "new," "green" and "alternative" energy sources subsidized by government spending. For example, in 1967, the Detroit Free Press proclaimed that "[C]ompanies are searching for a billion-dollar breakthrough in battery design. General Dynamics is working on a zinc-air cell battery. Ford is actively interested in a sodium-sulfur cell. Gulton Industries and General Motors are tinkering with lithium...All the activity is bound to pay off probably within the next five years..."

Basic economic theory — and common sense — tells us that people (and companies) spend their own money more carefully than they spend others; and it's easy to gamble on a product when using taxpayer dollars. If electric cars are the wave of the future, let automakers and electricity suppliers spend their own money and reap the dividends if and when these investments pay off.


Jarrett Skorup is the research associate for online engagement at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the Center and the author are properly cited.