Trump Is Right — Subsidies For Electric Cars, Renewable Energy Must End

President Trump’s economic adviser Larry Kudlow says subsidies for electric cars and other renewable energy programs might soon be eliminated.

That would be a major victory on the road to energy freedom.

National Economic Council chief Kudlow, a well-known free marketeer and supply-sider, said subsidies might disappear as soon as 2020 — interestingly, the next presidential election year.

The decision comes after General Motors — the beneficiary of $2,500-$7,000 tax credits for those who buy GM’s plug-in cars, not to mention two separate corporate tax cuts — decided to close five North American plants, leaving 14,700 workers without jobs. The move infuriated Trump.

“As a matter of our policy, we want to end all of those subsidies,” Kudlow said. “And by the way, other subsidies that were imposed during the Obama administration, we are ending, whether it’s for renewables and so forth.”

No doubt there will be much wailing and gnashing of teeth within the Green Movement. How will electric cars survive without government’s guiding hand?

The answer is, most won’t. Otherwise, the federal government wouldn’t need to subsidize them.

Democratic Opposition

As it is now, subsidies for each manufacturer are capped at 200,000 vehicles. Then the electric car credit starts to phase out.

Tesla is already in the phaseout; GM will get there soon.

No doubt, the new Democratic House will fight hard to keep the subsidies in place or even remove them entirely. And Kudlow admits that the White House can’t act unilaterally to end the program.

Meanwhile, as The Daily Signal observes: “Some members (of Congress) want to include a permanent extension of the $7,500 tax credit and to lift the 200,000 [vehicles] cap. An unlimited subsidy would be a massively expensive bill for taxpayers and a win for cronyism that awards money based on preferential treatment, rather than the competitive process.”

Subsidized Energy: Soft Socialism

In short, it’s the very opposite of a free-market economy, and the very essence of a soft-socialist economy. Haven’t we had enough of Washington bureaucrats telling us how to live our lives? Do inside-the-beltway types know more than millions of consumers? To ask the question is to answer it. No.

We wonder why these subsidies exist at all. Why should the government be urging consumers to buy one product rather than another, creating a major market distortion as they do so?

Moreover, the dirty little secret of the electric-car industry is that electric cars are dirty, too, and not necessarily cleaner than regular cars.

A recent Bloomberg piece highlighted a major study by Munich-based Berylls Strategy Advisors on the surprising truth about electric vehicles.

“The findings…show that while electric cars are emission-free on the road, they still discharge a lot of the carbon-dioxide that conventional cars do,” Bloomberg reported.

A big reason for this is the electric cars’ batteries, the heart of the industry. Many of the batteries are built in high-pollution countries like China, Thailand, Germany, and Poland, all of which depend heavily on coal for their energy.

So the CO2 produced just in making the electric cars is far greater than for a regular, gasoline-powered car.

In addition, when electric car charges, it’s really only as clean as the source of the electricity it uses.

In the U.S. in 2017, some 62.7% of all electricity was produced by coal, natural gas, oil, and other fossil fuels. Nearly a third — 30.1% — came from coal.

Coal-Fired Electric Cars

So every time someone charges an electric car, it creates CO2 emissions elsewhere. It’s not as clean as advertised. It’s like someone dumping their garbage on the lawn of a neighbor down the street while defending their own yard as pristine.

Don’t get us wrong: We’d love to see electric cars with long-lasting batteries fueled by ultra-clean energy sources.

But the technology doesn’t exist yet to let electric vehicles go the distances that people want their cars to go, or to recharge vehicles quickly enough. And electricity is still largely made by fossil fuels. Those are facts, not opinions.

Proponents say electric cars are an essential element in the war against global warming. This too is a joke. At enormous cost, electric cars would do little if anything even to slow predicted climate change.

No Help On Global Warming

In a study for the Manhattan Institute’s Economics 21 blog, economist Jonathan Lesser of Continental Resources, using government data on the expected number of new electric vehicles, found that “the net reduction in carbon dioxide emissions between 2018 and 2050 would be only about one-half of one percent of total forecast U.S. energy-related carbon emissions.”

“Such a small change,” Lesser concluded, “will have no impact whatsoever on climate.”

Moreover, the billions of dollars of subsidies and credits don’t go to all Americans, but mainly to high-income ones, since electric cars are still highly expensive on average.

As the Competitive Enterprise Institute explains, “79% of EV (electric vehicle) tax credits were claimed by households with an adjusted gross income of more than $100,000 a year.”

So Americans are subsidizing toys for the rich that aren’t necessarily either as economic or clean as advertised.

The same is true of other “alternative energy” subsidies, by the way. We should get rid of them all. They merely distort free energy markets, which will work just fine at delivering the best energy available at the lowest price.

Subsidies And Political Cronyism

Wind, solar and other “alternative” energies are near-perfect examples of political cronyism at its worst. They produce electricity at outrageously high cost.

They aren’t necessarily cleaner or better for the environment than fossil fuels. And they require subsidies to privileged, politically connected groups to exist.

The government shouldn’t be picking winners and losers in the marketplace. That’s especially true of energy, the lifeblood of the world economy. It’s almost always a costly error.

The Trump administration deserves kudos for recognizing these fundamental economic facts. We only wish the newly elected Democratic House–possibly the most left-wing group of elected officials in our nation’s history–also did.

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