Alternatives now finding ways to stand on their own

This article was originally published at The Empowerment Alliance and is re-published here with permission. 

For years, conservatives and other believers in free markets complained about the subsidies, tax breaks and favorable regulations designed to prop up the “alternative energy” movement. If solar, wind and other “renewables” were truly worthwhile, they should stand on their own, right?

Good news: There are signs that it’s finally happening. With the Trump administration rolling back as many Biden-era subsidies and incentives as possible, the alternatives movement has been forced to embrace the kind of market-based structure many have argued it should have followed all along.

The New York Times recently explored this phenomenon in a story headlined, “How Clean Energy Firms are Trying to Survive the Trump Era,” with a subhead noting that some companies are “looking for ways to carry on without federal backing.”

Many Americans – including those who run businesses and are forced to make a profit to keep the doors open – will find much to smile about throughout the article as leaders of firms specializing in renewables sometimes describe their efforts with a level of discovery that, by contrast, is quite basic and familiar to those steeped in long-held economic principles.

One environmentally friendly company landed on the conclusion that diversifying might make it more profitable. The company decided that by “producing multiple products together” it can “become economically competitive” with traditional competitors. In another instance, the chief executive of a start-up company declared, “We want our technology to be cost-effective no matter which way the policy pendulum swings.”

As the Times reports, “Other companies are making similar bets that they can displace fossil fuels even without government subsidies.”

That’s a welcome shift, but it also begs the question: If companies can, when necessary, figure out how to be competitive and even profitable without leaning on the crutch of government, couldn’t they have done so years ago and saved taxpayers upwards of $2 trillion or more over the course of a decade?

Of course, real-world, free-market economics means that not everyone is a winner. Without a cascading waterfall of tax dollars, some companies won’t make it, and others will have to dramatically scale back. As an example, the Times considers the case of companies working on technology designed to extract carbon dioxide from the air.

“During the Biden years, there was also a surge of interest — and more than $3 billion in federal funding — for companies that were experimenting with techniques to pull carbon dioxide from the air in an effort to slow climate change,” the story noted. “But many of those companies are now scaling back, as global warming has faded as a national political priority and federal funds have been in limbo.”

There is nothing to celebrate when it comes to businesses failing or contracting, even in an industry that relied so heavily on subsidies. A failed or diminished business means jobs lost and lives impacted. But such is the case with all businesses practicing free-market capitalism. Plans are cautiously laid, budgets are carefully estimated, a product or service is designed to be as attractive to consumers as possible and, at the end of the day, the dice is rolled. There are winners, and there are losers.

To be sure, there are those devoted to the cause of renewables who have long understood the need for profitability. A thoughtful analysis of the future of alternatives was presented in an article last year written by John Fitzgerald, then-CEO (now an advisor) of the Dublin-based superconducting cable tech company SuperNode, headlined, “If You Value Renewable Energy, Make it Profitable.”

Fitzgerald – while highlighting the fact that subsidies have also gone to fossil fuels – argued that more infrastructure is necessary to handle growing wind and solar outputs, and advocates focusing on building large continental scale electricity grids “supported by adequate storage.”

“Coordinated economic signals and significant infrastructure development, requiring planning and innovation, are prerequisites to deliver the energy transition,” he wrote. “Without them, national targets for renewables are unrealistic and should be acknowledged as such.”

As Fitzgerald pointed out, “Renewable developers must be profitable to attract investment and deliver the renewable energy projects we need to replace fossil fuels.”

Fitzgerald was primarily writing for a European audience, but his message resonates everywhere. “If we can make renewables as appealing to investors as fossil fuels are,” he concluded, “the energy transition will not only be possible – but inevitable.”

Many of us believe that there will likely be no transition from fossil fuels to renewables on the immediate horizon if “transition” means totally replacing one source of energy with another. Natural gas in particular will power the future, as evidenced by how much expansion the product is experiencing thanks in large part to the proliferation of AI data centers and the reality of their energy needs.

But alternatives can certainly add to the overall energy mix and offer even more choices – the kind of choices consumers enjoy in a free-market system where the government is not deciding winners and losers.

 

Gary Abernathy is a longtime newspaper editor, reporter and columnist. He was a contributing columnist for the Washington Post from 2017-2023 and a frequent guest analyst across numerous media platforms. He is a contributing opinion columnist for The Empowerment Alliance, which advocates for realistic approaches to energy consumption and environmental conservation.