For decades I have enjoyed the opinion-page editorials of the Wall Street Journal, both the unsigned editorials and the guest opinions. During the 1970s energy crisis, and today amid climate alarmism and the futile crusade to regulate carbon dioxide, the Journal has been a bastion of sound thought.

I was recently reminded of perhaps my favorite WSJ energy editorial of all, “Buffer of Civility,” published during the dark days of energy rioting in summer 1979 (yes, the U.S. experienced fuel riots from federal price controls that caused energy shortages). What brought this to mind was another WSJ editorial, “Sebelius’s Price Controls,” which reported on a 136-page price-regulating rule under ObamaCare–and this message to state governors from HHS Secretary Kathleen Sebelius

urging them “to prevent unjustified and excessive health insurance premium growth.”

[Editors note: this post is a summary/review of the article by Jonathan Lesser, “Gresham’s Law of Green Energy: High-Cost Subsidized Renewable Resources Destroy Jobs and Hurt Consumers” (Regulation magazine, Cato Institute).]

“Industries that require never-ending subsidies simply cannot increase overall economic welfare. To conclude otherwise is to believe in ‘free-lunch’ economics of the worst kind. Yet, free-lunch economics are driving the push for renewable energy.”

– Jonathan A. Lesser

Jonathan A. Lesser, of Continental Economics Inc., has written a penetrating essay describing the unmet promises of subsidies to so-called green energy (or politically correct, nonhydro renewables). He looks at the supposed benefits of these subsidies and the associated costs and comes to a familiar conclusion: government-subsidized energy is uneconomic energy.

The arguments for green energy subsidies are numerous; perhaps most used are those pertaining to putting people to work and even creating wholly new industries that will re-invigorate the entire economy (the Obama fantasy). …

In the waning hours of the tax bill debate last December, the Obama Administration and GOP leaders released the terms for continuing the Bush-era tax cuts. The framework negotiated between the parties initially omitted any reference to extending the renewable energy programs introduced in 2009 under the American Recovery and Reinvestment Act of 2009 (ARRA), which were scheduled to sunset at the end of 2010.

The renewable industry responded ferociously. A media blitz hit overnight, and wind and solar lobbyists huddled with lawmakers on Capitol Hill. Repeated warnings about job loss and the immediate harm to green energy businesses worked. Lawmakers relented and sanctioned a 1-year extension. The windfall? A check from the U.S. Treasury for 30 percent of a project’s qualifying cost.

With the fuss now behind us, we decided to examine one of the more popular renewable subsidy programs to be extended, the Section 1603 cash grants.…

[This interview of Robert L. Bradley Jr. by Stephen Hicks (website here) is part of a series: Part I (Libertarianism and Energy); Part II (Expanding Energy Horizons); and Part III (Enron as a Political Company).]

Kaizen: You mentioned that Enron was also involved in lots of alternative energy sources—wind power, solar power, “green” energy, and that it was one of the first at the political table. Did Enron think that with the right kind of farsighted investment the new energies could be profitable?

Or was this again part of a political strategy: Alternative energy was a political favorite, certainly during the Clinton Administration years, when Al Gore was vice president? So Enron is getting a seat at the table; and whether alternative energy actually succeeds or not, it’s a good business strategy at least in the short term.…