Conservatives’ first instincts on energy and innovation—get the government out of the way and let markets decide—are sound general principles that only go so far in highly regulated sectors like energy. Innovation-centered regulatory reforms are indispensable—but there are also positive actions that government should take, in partnership with the private sector, to develop cleaner, more reliable, affordable, and secure energy technologies.
These initiatives recognize genuine market failures and provide appropriate, narrowly tailored policies to unleash the innovation abilities of the nation’s energy entrepreneurs.
Government has played an indispensable, constructive role in America’s innovation system in the past, and should do so in the future.
The challenge is to accelerate innovation while avoiding the trap of corporate welfare and the temptation for the government to make choices that are better left to markets and consumers.
Doing so successfully requires a careful balancing and focus in policy design, ensuring there is government support for the right activities—and not for the wrong. For example, we believe:
- The federal government should partner with the private sector on long-term, high-risk, potentially transformative pre-commercial technologies—but it should not select or promote end-state energy technologies or preferred companies or products.
- Energy markets are far from free and competitive. We see that as cause to correct market failures where we can, not a reason to ignore the realities of markets or the limits of government’s competence.
- Federal programs should focus narrowly on the true market failure—insufficient research and development of innovative technologies—rather than subsidizing or mandating the use of uncompetitive alternative energy technologies.