Want to limit our use of carbon-based energy sources? You can pursue government mandates and taxes that artificially raise the cost of using those sources.
Or you can rely on innovators and entrepreneurs who are constantly looking for less expensive, more effective ways to meet our energy needs.
Newsweek has an article this week about a fuel cell “that can power anything from a single home to a whole city.” I have no idea whether this cell will become a viable power source in the future, but I did find interesting this exchange between interviewer Fareed Zakaria and entrepreneur K.R. Sridhar:
Your capital cost is high, something like $7 or $8
per watt.
Right now we are only economical with subsidies.Why do you think this will be viable without
subsidies in the future?
If I build a large automobile
plant, and I have just put out the 30th car, do you expect me to be
profitable? Ask anybody in manufacturing: for every doubling in volume,
you will see a 10 to 15 percent reduction in cost.
Left to his own devices, Mr. Sridhar will find a way to make his project economical, or he won’t. If he does, that will mean good news for consumers of electricity. If he doesn’t, consumers will face no harm from his efforts.
What if the government steps in and decides Mr. Sridhar’s project deserves taxpayer support? Suddenly, the need to economize becomes less urgent. Even if the project works, consumers will not reap the benefits of lower costs tied to continuous innovation. Moreover, they’ll lose out as taxpayers as well; tax revenue that could have paid for core government services will have been diverted instead subsidize a business that has not been able to find a way to survive on its own.
