The Trump Administration recently unveiled a proposal that will require utilities to buy power from plants scheduled to be retired. The purported goal of this mandate is to allow coal-fired plants to remain in operation. This comes just a decade after then-candidate Obama vowed to bankrupt coal-fired plants.
Through a combination of environmental regulations on power generators and subsidies for “renewables,” Obama made coal-fired plants less economically competitive. (Falling natural gas prices also contributed to the situation.) But rather than repeal Obama’s marketplace interventions, Trump proposes more interventions.
Forcing utilities to buy from a particular source is not a return to a free market, nor is it a step in that direction. It is simply another intervention designed to overcome the problems from a previous intervention.
Mandates, regulations, and prohibitions force individuals and businesses to act contrary to their own judgment. They force individuals to take actions that they would otherwise deem inappropriate. Similarly, subsidies entice individuals and businesses to engage in actions that otherwise make no sense. You might consider solar panels or an electric car too expensive, but if the government gives you a big tax break, making such a purchase might become more feasible.
Obama was criticized for picking winners and losers because of his energy policies that favored “renewables” and punished coal. But Trump is equally guilty of picking winners and losers with his energy policies.
Instead of proposing further interventions in the market, Trump should simply repeal the previous interventions. Let the market decide. Let wind, solar, coal, nuclear, hyrdo, and natural gas all compete in a free market without government subsidies, restrictions, or controls.
Abundant, affordable energy makes modern civilization possible. Let’s free the energy entrepreneurs. We will all benefit.