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Subsidies are needed

(See also the Wind Power PRO brief, has very good stuff and Ethos Ethanol PRO brief, very good stuff on R&D)

Contents
Contents..........................................................................................................................................................................1

General subsidies are necessary......................................................................................................................................2

A: There is no such thing as subsidy-free energy.......................................................................................................2

B: History shows that energy industries grew when helped by government support.................................................2

Subsidies are necessary for the development of alternative energy............................................................................2

Tax incentives help the economy and the environment..............................................................................................2

Subsidies drive the alternative energy industry..........................................................................................................3

Large business players need a government price signal (which is what subsidies are)..............................................3

We need more subsidies on renewable energy...........................................................................................................3

If the government put the proper price signal in place, the clean power sector would take off.................................3

Ethanol............................................................................................................................................................................3

The growth in ethanol is a direct result of subsidies...................................................................................................3

Subsidies have driven the ethanol industry’s growth..................................................................................................4

Subsidies help ethanol blenders and producers...........................................................................................................4

Subsidies have allowed growth with ethanol..............................................................................................................4

Ethanol Subsidies are a bargain for American taxpayers............................................................................................4

Food and energy markets are already distorted by other things than ethanol subsidies.............................................4

Green Jobs.......................................................................................................................................................................5

Green investment is opportunity for job creation.......................................................................................................5

Green jobs are already growing .................................................................................................................................5

Green investment will pick up....................................................................................................................................5

There has been rapid growth and it will continue ......................................................................................................5

Note:
This brief is put into three categories: general stuff, ethanol, and green jobs (think of green jobs as an advantage of
subsidies).

Ethos has some EV about subsidies being good for ethanol in the Cellulosic Ethanol PRO brief. It has some good
stuff if you have Ethos. If you have Ethos you may want to copy and paste the EV into this brief.

Btw, the Thomas Friedman quotes are helpful, but some teams may press you on his credentials. I would argue that
first he is qualified and second the opposing team should be debating the claims of the EV not who made the claim.

General subsidies are necessary

A: There is no such thing as subsidy-free energy

B: History shows that energy industries grew when helped by government support
Ron Pernick (cofounder and principal of Clean Edge, a leading clean-tech research firm, has coauthored more than
a dozen reports on clean technologies) and Clint Wilder (contributing editor at Clean Edge, has covered the high-
tech and clean-tech industries as a business journalist for than two decades), “The Clean Tech Revolution,”
Harper-Collins Publishers, © 2007, pg. 280

Skeptics and naysayers have traditionally dismissed clean-energy technologies like solar and wind by arguing that
these technologies “can’t compete on price with public subsidies.” The problem with this argument is that there is no
such thing as subsidy-free energy, and there never has been in the modern world. The history of coal, oil, natural
gas, large-scale hydro-electric, and especially nuclear power—a subsidy all-star if there ever was one—makes it
clear that all these industries’ growth occurred partly with the direct and indirect financial support of governments
that wanted to encourage them.

Subsidies are necessary for the development of alternative energy


Mona Hymel (Professor of Law at the James E. Rogers College of Law at the University of Arizona, University of
Texas, J.D.), “The United States' Experience with Energy-Based Tax Incentives: The Evidence Supporting Tax
Incentives for Renewable Energy,” Social Science Research Network, Arizona Legal Studies Discussion Paper No.
06-21, April 2006 (page 25)

Studies evaluating the effectiveness of tax incentives for alternative or renewable fuel technologies indicate
subsidies have been necessary to the development of this industry. Entering into the energy industry with its deeply
entrenched infrastructure presents potential investors with difficult barriers. In fact, without the federal tax
incentives to keep its price competitive with conventional fuels, no market would exist for alcohol fuels, and thus,
no capital. The federal tax incentives were instrumental in overcoming the risk factor and establishing this industry.
Thus, tax incentives (or other incentives) are necessary to the development of alternatives.

Tax incentives help the economy and the environment


Mona Hymel (Professor of Law at the James E. Rogers College of Law at the University of Arizona, University of
Texas, J.D.), “The United States' Experience with Energy-Based Tax Incentives: The Evidence Supporting Tax
Incentives for Renewable Energy,” Social Science Research Network, Arizona Legal Studies Discussion Paper No.
06-21, April 2006 (page 27)

Tax incentives can help increase the market for new energy efficient products by reducing their cost and lowering
the risk of production for manufacturers. As a result of tax incentives, the public benefits from lower energy use,
environmental quality improvements, and enhanced energy security.
Subsidies drive the alternative energy industry
Martin de Sa'Pinto, September 17, 2009, “Green energy on a roll but experts warn of bubbles,” Reuters,
http://www.reuters.com/article/GCA-GreenBusiness/idUSTRE58G4KE20090917?sp=true

At present government expenditure and subsidies are already a significant driver of the alternative energy industry.
"Some $500 billion has been focused on alternative energy... with a growing emphasis on energy efficiency," said
Sandy Christie of BlackRock Investment Management, UK.

Large business players need a government price signal (which is what subsidies are)
Thomas Friedman (awarded the Pulitzer Prize three times for his work with The New York Times, where he serves
as foreign affairs columnist, author of five books on current affairs), Hot, Flat, and Crowded: Why We Need a
Green Revolution--and How It Can Renew America, published in 2008 by Farrar, Straus, and Giroux, (255-256)

GE’s Jeffrey Immelt put it best: The big energy players are not going to make “a multibillion-dollar, forty-year bet
on a fifteen-minute market signal. That just doesn’t work.” Big industrial players like GE need some price certainty
if they going to make big long-term bets on clean power, and to those market dogamtists who say that the
government should not be in the business of fixing floor prices or other incentives to stimulate clean power, Immelt
says: Get real. “Don’t worship false idols. The government has its hand in every industry. If we have to have them,
I’d prefer they were productive rather than destructive.”

We need more subsidies on renewable energy


Thomas Friedman (awarded the Pulitzer Prize three times for his work with The New York Times, where he serves
as foreign affairs columnist, author of five books on current affairs), Hot, Flat, and Crowded: Why We Need a
Green Revolution--and How It Can Renew America, published in 2008 by Farrar, Straus, and Giroux, (257-258)
(brackets added for clarification in regards to Immelt, brackets in original in regards to renewable energy)

“Government is a huge player in health care, with huge subsidies,” said [Jeffrey] Immelt [chairman and CEO of
GE]. “Cancer will be cured in our lifetime because of that. Why not in [renewable] energy?”

If the government put the proper price signal in place, the clean power sector would take off
Thomas Friedman (awarded the Pulitzer Prize three times for his work with The New York Times, where he serves
as foreign affairs columnist, author of five books on current affairs), Hot, Flat, and Crowded: Why We Need a
Green Revolution--and How It Can Renew America, published in 2008 by Farrar, Straus, and Giroux, (372)

Why would such a clear set of directives from the top down make such a big difference? Because once the business
community had a clear, durable, and long-term price signal for carbon, a clear sense of what the national market
would be for clean power sources like wind and solar, and a clear set of regulations and incentives in place across
the country to encourage utilities to help their customers do more energy saving than energy consuming, said
Immelt, the market opportunities would be obvious to everyone. We would finally have some long-term clarity for
investors to make big bets. And at that point, all of America’s tremendous assets – our universities, national
laboratories, individual inventors, risk takers, venture capitalists, free markets, and multinationals, like GE and
DuPont, which drive their own research and understand how to commercialize innovation – would get fully into
gear, go “all in” on renewable energy, and the whole clean power ecosystem would just take off.

Ethanol

The growth in ethanol is a direct result of subsidies


Robert W. Hahn (executive director of the AEI Center for Regulatory and Market Studies, Visiting Senior Fellow at
Smith School at Oxford University, previously served as a senior staff economist on the President's Council of
Economic Advisers), 2008, “Ethanol: Law, Economics, and Politics,” Stanford Law & Policy Review, Volume 19,
Issue 3(PDF file)

Ethanol production in the United States has been steadily growing and is expected to continue to grow. The growth
in this industry is a direct result of subsidies and regulations at both the federal and state level aimed at promoting
ethanol use, especially corn ethanol.

Subsidies have driven the ethanol industry’s growth


Robert W. Hahn (executive director of the AEI Center for Regulatory and Market Studies, Visiting Senior Fellow at
Smith School at Oxford University, previously served as a senior staff economist on the President's Council of
Economic Advisers), 2008, “Ethanol: Law, Economics, and Politics,” Stanford Law & Policy Review, Volume 19,
Issue 3(PDF file)

The major driver behind the development of the fuel ethanol industry in the United States is the Volumetric Ethanol
Excise Tax Credit, the federal subsidy for ethanol that is used in gasoline.

Subsidies help ethanol blenders and producers


Robert W. Hahn (executive director of the AEI Center for Regulatory and Market Studies, Visiting Senior Fellow at
Smith School at Oxford University, previously served as a senior staff economist on the President's Council of
Economic Advisers), 2008, “Ethanol: Law, Economics, and Politics,” Stanford Law & Policy Review, Volume 19,
Issue 3(PDF file)

The federal tax credit was created in 1978 by the Energy Tax Act, which provided blenders with $0.40 for every
gallon of ethanol that they blended with gasoline. Although only ethanol blenders could claim this credit, the
subsidy indirectly benefits other groups, such as ethanol producers and owners of land where corn can be produced.

Subsidies have allowed growth with ethanol


Wallace E. Tyner (a professor of agricultural economics at Purdue University), Jul/Aug 2008, “The US Ethanol and
Biofuels Boom: Its Origins, Current Status, and Future Prospects,” Bioscience, Vol. 58 Issue 7, p646-653

That subsidy together with oil in the $ 10 to $30 range was sufficient to permit growth in ethanol production (figure
2) from about 1625 million liters (430 million gallons) in 1984 to about 12.85 billion liters (3.4 billion gallons) in
2004 (Tyner 2007b).

Ethanol Subsidies are a bargain for American taxpayers


Robert Zubrin ( the author of the book on energy policy, Energy Victory: Winning the War on Terror by Breaking
Free of Oil, a senior fellow at the Foundation for Defense of Democracies, a New Atlantis contributing editor, and
overall nice person), “In Defense of Biofuels,” The New Atlantis (A Journal of Technology & Society), Summer
2008 edition, http://www.thenewatlantis.com/publications/in-defense-of-biofuels

But if that Merrill Lynch figure is correct—if the price of oil would be about 15 percent higher were it not for
biofuels—then that comes to a savings of about $18 per barrel at current oil prices. The United States will import
about 5 billion barrels of oil this year. Saving $18 for each barrel, that adds up to a savings for the country as a
whole of $90 billion in foreign oil payments this year, and a reduction in OPEC global revenues overall of more than
$180 billion. This, in addition to cutting another $20 billion from our oil bill by reducing the amount of petroleum
that we import. Not bad, considering the pittance that American taxpayers actually shell out for the nation’s corn
ethanol program: only about $4 billion per year, through a subsidy of 51 cents per gallon.

Food and energy markets are already distorted by other things than ethanol subsidies
Robert Zubrin ( the author of the book on energy policy, Energy Victory: Winning the War on Terror by Breaking
Free of Oil, a senior fellow at the Foundation for Defense of Democracies, a New Atlantis contributing editor, and
overall nice person), “In Defense of Biofuels,” The New Atlantis (A Journal of Technology & Society), Summer
2008 edition, http://www.thenewatlantis.com/publications/in-defense-of-biofuels

But it must be remembered: the global markets for food and energy are already badly distorted by trade restrictions,
in the case of the former, and by the machinations of the OPEC cartel, in the case of the latter. Insofar as the nascent
biofuels industry will result in eased trade restrictions (so that nations will be able to buy and sell agricultural
products for fuel) and in a weakening of OPEC’s monopoly power (by bringing into the energy market new fuels
that can compete with oil), supporters of free markets should offer three cheers for the rise of biofuels.

Green Jobs

Green investment is opportunity for job creation


“Greening the Rustbelt,” August 13, 2009, The Economist,
http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=14214855

Green investment presents new hope. The University of Massachusetts, Amherst, and the Centre for American
Progress, a think-tank, estimated in June that the federal stimulus package and a climate bill would spur about $150
billion in spending on clean energy each year for the next decade. That spending, in turn, would create an estimated
2.5m jobs, from academic researchers to factory workers making wind turbines. “This is an opportunity for
American ingenuity to renew the manufacturing base,” argues Phyllis Cuttino of the Environment Group at the Pew
Charitable Trusts.

Green jobs are already growing


“Greening the Rustbelt,” August 13, 2009, The Economist,
http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=14214855

There are already signs of activity. The Great Lakes Wind Network, based in Ohio, helps local firms sell goods to
the wind business. Toledo remains one of the best examples of a town moving from the old economy to a newer one.
It has been a hub for the glass manufacturing since the 19th century. Thanks to innovations in solar technology at the
University of Toledo, it is now home to a cluster of firms such as Xunlight. State grants continue to help the
university hatch companies. The Regional Growth Partnership, a local business group, provides venture capital. In
Michigan despair has bred particularly bold action. In the past five years Jennifer Granholm, the Democratic
governor, has dangled more than $1 billion to attract alternative-energy firms, with about $700m in tax credits to
develop electric-car batteries. Impressively, Michigan had the third-highest number of clean-tech patents from 1999
to 2008, behind only California and New York, reckons Pew. That number may rise.

Green investment will pick up


Oskar Garcia, August 10, 2009, “Labor sec'y says green jobs hiring will pick up,” Associated Press,
http://www.miamiherald.com/business/breaking-news/story/1179431.html?storylink=mirelated

Hiring in the alternative energy industry will pick up in the next 12 months, though it will take more time before so-
called green-jobs will become a bigger part of the U.S. job market, Labor Secretary Hilda Solis said Monday. "Once
you start seeing more investments made in our economy recovering, as we stabilize and we get people back to work,
then I think there'll be more interest in expanding," Solis said.

There has been rapid growth and it will continue


Oskar Garcia, August 10, 2009, “Labor sec'y says green jobs hiring will pick up,” Associated Press,
http://www.miamiherald.com/business/breaking-news/story/1179431.html?storylink=mirelated

[Energy Secretary Steven] Chu said federal officials have yet to award more money to other projects because they
are reviewing proposals and want to make sure they pick the wisest possible investments. "We're moving," he said.
The alternative energy sector could spark a new "industrial revolution," with better prospects for minorities and new
training for workers with traditional vocational skills, Solis said. There has been rapid growth in the industry, but
employment in the green business still makes up only about half of one percent of all jobs.

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