Should the Government Subsidize or Incentivize Energy?

On July 4, President Trump signed into law his spending bill, which included, as spending bills have done over many administrations, elements regarding energy. As the Wall Street Journal reported, “Renewable-energy companies are bracing for the end of government subsidies after the passage of Trump’s ‘big, beautiful bill’” as the “wave of government spending that swept through the U.S. economy in recent years is about to recede. … Credits for EVs and home solar panels are slated to end in the coming months. Incentives to develop or produce renewable energy will wind down within years. The legislation, meanwhile, boosts the prospects for fossil-fuel production on public lands, a boon to oil-and-gas drillers that are pumping record supplies and posting bumper profits.”

Additionally, “Clean energy companies were surprised by the sudden appearance of a tax that they hadn’t realized was under consideration. It would apply to wind and solar projects completed after 2027 if they use a certain percentage of components from China, the industry’s primary supplier of everything from critical minerals to batteries.”

Taxes, subsidies and incentives are different sides of the same coin. Taxing energy production is the opposite of subsidizing or incentivizing but it has the same effect: the government is favoring one type of energy over another, choosing winners or losers by adding cost instead of reducing cost.

We have seen this battle play out across administrations — offering subsidies or incentives for certain kinds of energy, taxing others — and then changing when the new administration comes in. It happens in both parties, as each party subsidizes and incentivizes the type of energy they favor, and taxes the type they disfavor.

All of this needs to stop. The government shouldn’t be picking the winners or losers in the energy sector; if we are truly a free market economy, the markets should decide who the winners and losers are. We should simply develop all types of energy and let the markets decide.

And we can have faith that our free-market economy will make the correct choice. It always does. How do I know this? Because we’ve seen it happen before: in the organic food movement.

In the 1950s and 1960s, organic gardening had some popularity, but it wasn’t particularly mainstream. In the 1970s, in part due to the rise of the environmental movement, organic foods started to become more in demand. However, in order to determine whether your food was organic, you generally had to buy directly from growers. It was up to the individual consumer to determine whether the food they were purchasing was organic.

In 1972, the International Federation of Organic Agricultural Movements was founded, with the intention of encouraging organic farming practices worldwide. Organic food continued to grow in popularity until 1990, and the organic food industry totaled around $1 billion in sales. This is when the US Congress passed the Organic Foods Production Act, which established uniform national standards for organic food. That Act authorized a new USDA National Organic Program (NOP) to certify that producers meet the standards set by the NOP. If producers meet the standards, they can label their products as “USDA Certified Organic.”

With this label, consumers could now see at a glance whether the product they were buying was organic, rather than having to determine that information for themselves. And they know they can trust that the product is, in fact, organic, even if they haven’t connected directly with the producers of the food. Since then, organic food sales have continued to skyrocket. From 2005 to 2019, organic food sales in the United States grew from $13.26 billion to $50.07 billion.

Now, imagine we could do this same thing with the environmental impact of a product. The fact is, most consumers want to make the environmentally conscious choice—but usually, they don’t have sufficient information to do that quickly and easily. Now, imagine an attribute, based in science and math, that could objectively evaluate a product or service’s carbon footprint. Imagine that attribute to be easily communicable, so simple, that it can be put on a label which can be understood immediately and easily by a consumer.

This is exactly what the International Carbon Equivalent Mechanism Attributed to Neutrality (ICEMAN) offers. With an ICEMAN Carbon Factor Index Label, consumers will have that information at a moment’s glance. Once consumers know the carbon footprint of products, market forces will be more powerful in initiating change than any government subsidy or incentive. Consumer power will drive manufacturers and businesses to make their operations and products closer to carbon neutral in order to maintain their competitive advantage. As manufacturers and businesses create more low-emission and carbon neutral products to meet demand and grow their competitive edge, energy consumption will shift all on its own—without any government interference.

As Neil Bradley, executive vice president of the U.S. Chamber of Commerce, posted on X after the spending bill was passed, “Taxing energy production is never good policy, whether oil & gas or, in this case, renewables. Electricity demand is set to see enormous growth & this tax will increase prices. It should be removed.”

I say the same for subsidies and incentives. I’m not an extremist when it comes to climate change. I’m practical. We will always have fossil fuels, whether we like it or not—but if government gets out of the way, if we allow our free market to prevail without subsidies, incentives or taxes, the energy the consumer decides is best will ultimately become the winner.

America is supposed to be about “We, the People.” Government needs to stop usurping the power of The People. We need to give the power back to the people to make their own choices, rather than having the government make choices for us. ICEMAN allows the market to decide by allowing the consumer to decide. It gives the power back to the consumer—back to We, the People—to pick the winners and losers.

Frank Dalene, an Amazon Best Selling Author in Green Business & Environmental Economics titled, Decarbonize The World: Solving The Climate Crisis While Increasing Profits In Your Business, and Founder of the Hamptons Green Alliance, a 501(c)(3) Public Charity. Learn more at frankdalene.com and hamptonsgreenalliance.org.