Investing In Clean Energy: Time To Subsidize?

by Stuart Shapiro

Two think tanks from opposite ends of the ideological spectrum came together today to issue a report recommending a $25 billion annual investment in clean energy.  The AEI-Brookings report recommends several methods for investing the money (h/t David Leonhardt).

This joint paper by the Brookings Institution, the American Enterprise Institute, and the Breakthrough Institute argues that the federal government should invest roughly $25 billion per year in military procurement, R&D, and a new network of university-private sector innovation hubs to create an energy revolution. The program should be financed through several mechanisms, including a low price on carbon.

The idea is that since we have failed to put a price on dirty energy, perhaps we can combat climate change by subsidizing clean energy.  This would have the added benefit of making it potentially cheaper for other developing countries to cut back their emissions by developing innovations that could be exported.  However I am not sanguine about its political prospects given the current reluctance to spend money on anything.  It appears that AEI is now to the left of the Republican caucus.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.