Tuesday, November 3, 2009

Eco-nomics: The Trouble with Picking the Winners

Thomas Boyd/The Oregonian

This story in The Oregonian on Sunday about how the cost of the green energy tax credits are much higher than have been presented and how millions of dollars have gone to failed companies illustrates something that I have been arguing for a long time now to anyone who will listen: trying to create a green energy economy in Oregon is a mug's game. What will be the best technology: wind, wave, solar, geothermal, something else? Which companies are going to come out as leaders in the future? The answers to these questions are far from clear so trying to read the tea leaves and throwing hundreds of millions of dollars at a wall to see what sticks is not necessarily a good idea.

I am not against all government incentives, but the best investment the state could make if it really wants to promote economic growth in the state, green energy or otherwise, is in education, and if it is serious about a green energy economy, investing in research universities seems about as safe a bet as there is. You get research and technology spillovers that are centered in the state and you educate and train a new generation of entrepreneurs and workers to take those new technologies and run with them.

It seems that in Oregon these days the balance is out of whack...


Evan said...

Since we spend $6245 million a biennium on K-12 education, and $4600 million for higher education, we already prioritize both those things a lot higher than rural jobs for our clean energy future at $160 million.

Jeff Alworth said...

Your argument seems sound enough, but don't you have to compare competing incentives? We don't just incentivize green energy--we incent all energy. I'm not sure what the state spends on other energies, but as a nation, we give WAY more dollars to coal companies than to windmill makers.

It's a political dead-end, but the better strategy would be to tax carbon and remove incentives to green energy. Merely by taxing the carbon, you give a huge incentive to efficient low- or non-carbon sources.

As to the higher ed thing, I'm totally with you. By coincidence:


Patrick Emerson said...


It is all about marginal impacts not total impacts. My argument is that in general I think an investment in the human capital and knowledge capital of the state is a better bet than taking a flyer on specific green energy technologies and companies.