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It's been a while, #energytwitter, but it's time for another nerd rant. This time on the difference between being pro-market and pro-business, and how that has distorted US energy policy. Thread:
1/ First, an observation that is too often over-looked. NO ONE comes to Washington to advocate for economic efficiency. That is a problem, and a massive opportunity.
2/ By economic efficiency, I mean the stuff you learned in the 1st chapter of freshman econ which was stipulated to be true for the math in the rest of the book to hold up. No barriers to entry / exit. Transparency of information. etc.
3/ But no one comes to DC and says "Hey, can you make the world safer for my competitors?" Which is fine... but for the fact that policies that are expressly designed to be pro-business are often pitched in pro-market language. Those terms are not always (rarely?) synonymous.
4/ This holds us back, but is also an enormous opportunity. The incentives that created all those anti-market policies also mean that we have enormous opportunities to make our markets more efficient by removing existing, regulated distortions.
5/ And furthermore, even those who would benefit from the removal of those distortions rarely make that ask; they ask for incentives to counter the headwind rather than ask us to get rid of the conditions WE CREATED that made their progress so hard.
6/ It's why I said that the top priority of the Biden administration should be eliminating fossil fuel subsidies. https://twitter.com/RepCasten/status/1326943247596462088?s=20
7/ And for what it's worth, Adam Smith made this point more pithily 200+ years ago:
8/ But as Smith understood, the opportunity that exists to create more market-friendly conditions is precisely what makes it so hard. We pay lip service to competitive markets, but the incentives of "civil government" as constituted in the US don't push that way.
9/ That is why the US subsidizes the fossil fuel sector to the tune of $650 billion / year. https://www.imf.org/en/Publications/WP/Issues/2019/05/02/Global-Fossil-Fuel-Subsidies-Remain-Large-An-Update-Based-on-Country-Level-Estimates-46509
10/ And why when the COVID-driven downturn came last spring, one of the first things the Trump administration did was inject tax payer $ to try and prop up the oil industry. https://www.energy.gov/articles/department-energy-executes-direction-president-trump-announces-solicitation-purchase-crude
11/ And why today the @USOCC is seeking to compel banks to invest in the fossil sector, regardless of market fundamentals. https://twitter.com/vtg2/status/1329881714974453762?s=20
12/ (As an aside on that last one, when China directs their banks to invest in low-return belt & road initiatives we rightly bash it as anti-market. This is no different, and folks at the @USOCC deserve the same criticism.)
13/ On my end, we will continue to push for pro-market policies and will call out those who use the language of markets to support anti-market, crony-capitalism.
14/ Meanwhile, to my friends in the clean energy industry, a request: get organized. Push for barrier / subsidy removal as hard or harder than you push for more incentives. Otherwise we're just putting ever bigger engines in a car that still has the emergency brake on.
15/ And as you succeed... as you remove those market distortions so that your inherently economically-superior products can thrive... don't lose sight of how you got there. Competition is hard. I get it. It is our collective obligation to fight for it. /fin
