Trump should eliminate Green energy subsidies and mandates

And so should state governments.

Jan 14, 2025

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This article is part of a series on policy advice for the second Trump Administration from the Progress-based perspective. I would recommend reading the first article in the series before reading this article.

This article displays a “Table of Contents” to the other articles in this series.

A key goal of the second Trump administration (and every other administration) should be to promote long-term widely shared economic growth. Energy is a key foundation for that goal.

We need an energy system that is abundant, affordable, and secure. A key part of that energy system is the electrical grid. An electrical grid that provides abundant, affordable, and secure electricity is essential for enabling consumers to use cheap consumer devices, computing power, and communication with the rest of the world.

The material standard of living of ordinary people is remarkably higher because of the following electric-powered technologies: home computers, battery-powered mobile devices, printers, lightbulbs, clocks, dishwashers, microwaves, ovens, vacuum cleaners, air conditioning, fans, clothes washers, clothes dryers, and hair dryers. Plus an increasing number of consumers own electric vehicles that consume large amounts of electricity during recharging.

One can also add the benefits of natural gas-powered home appliances, such as furnaces, water heaters, outdoor grills, and ovens/ranges, and gasoline to power their cars. Industry also greatly benefits from affordable electricity, oil, and natural gas.

Indeed, without the above technologies, we are suddenly plunged back to the standard of living of the 19th Century in many domains. All of the above consumer technologies are cheap enough that the vast majority of American consumers can afford to purchase them, but they all have one key vulnerability.

Electric-powered products need an abundant, affordable, and secure electrical grid to function. Expensive electricity undermines many of the benefits of affordable electric appliances.

Green energy = expensive and unstable energy

Unfortunately, over the last few decades, the US electrical grid has moved in the wrong direction. Current Green energy subsidies and mandates have created a massive multi-trillion dollar rent-seeking industry that delivers minimal benefits to the natural environment.

Electricity prices are getting more expensive, and disruptions of service are getting more common. The spike in electricity prices have been particularly pronounced since 2020. And these negative changes are concentrated in certain states that have implemented Green energy policies.

Now a significant portion of these price increases are related to general inflation (a big problem in itself), but when one looks at state-level variations, the causes become much more clear.

The reason is simple: federal and state government subsidies and mandates that require electrical grids to adopt Green energies, particularly solar and wind. Federal and state regulations and taxes also seriously hinder the exploration, drilling, distribution, and sales of coal, crude oil, and natural gas.

While Greens claim that solar and wind are “cheaper than fossil fuels,” the fact remains that every nation or region that has deployed the two technologies at scale has seen increased electricity prices. In many cases, the price increases are dramatic.

States with affordable electricity tend to have no or less stringent Green energy subsidies and mandates. This is largely because they have Republican-dominated state legislatures.

The negative effects of these Green energy policies are even more pronounced in Europe. While many US states have electricity prices under 12 cents per kW, it is typically three times that price in Western Europe.

And price spikes caused by Dunkelflaute (when solar radiance and wind are both very low) have caused electricity prices to temporarily go far beyond that level. Here are electricity prices in Europe on Dec 12, 2024 (roughly 100X prices of many US states). Irresponsible Green energy policies in Germany and other nations caused electricity prices to spike all across the European continent.

Sadly, because the European grid is so interconnected, even nations without Green energy prices suffer incredibly high electricity that:

Undermine their standard of living, particularly the working class and poor
Undermine the competitiveness of the manufacturing and distribution networks.

European nations that rely on nuclear, hydro, coal, and natural gas for their electricity are effectively subsidizing nations that choose to rely on wind and solar power.

The problem is getting so bad that Norway (95% hydro-based electrical system) and Sweden (largely hydro and nuclear) are seriously considering disconnecting from the European electrical grid. If this happens, and both nations have a strong incentive to do so, European electrical prices will increase far higher. This would strongly incentivize France, Switzerland, Belgium, Finland, Poland, Slovakia, Croatia, Czechia, and Austria (all with relatively low percentages of wind and solar) to disconnect from the European grid as well.

This would cause the largest energy crisis in European history.

If the government policies do not change course soon, the results will be similar in the United States. It is already happening in many Blue states with strong Green energy subsidies and mandates:

Opposition to subsidies is not opposition to energy

Let me be clear: I am not opposed to solar and wind technologies. In certain geographies with certain profiles of electricity demand, solar, and wind can be useful supplements to fossil fuels, hydro, and nuclear power. Unfortunately, federal and state government subsidies and mandates incentivize the construction of solar and wind plants everywhere else. A particular problem is that the subsidies and mandates are not even tied to the generation of useful electricity that is used by the end consumers.

I am opposed to Green energy subsidies and mandates that compel the construction of solar and wind plants and the use of their electricity, even when doing so leads to higher energy prices and less grid stability. Green argues that these policies are necessary to avert a climate catastrophe by getting a global Netzero by 2050.

I believe this government-sponsored Green Energy Transition is the wrong strategy as it will:

Fail to achieve its goal of Netzero by 2050
Make virtually no difference in future global temperatures.
Cost tens of trillions of dollars globally (an estimated $1.77 in 2023 alone)
Greatly increase energy prices
Undermine long-term economic growth
Undermine the material standard of living for the working class and poor
Makes the electrification of transportation more difficult.
Provide huge economic gains for China, which dominate the supply chain for many Green energy products.
Is completely unnecessary.

Fortunately, there are energy policies that enable the United States to have an abundant, affordable, and secure energy system for the foreseeable future. In particular, natural gas is affordable, abundant, secure and amazingly flexible in its uses. And natural gas replacing coal-burning power plants is the most cost-effective means to reduce carbon emissions in electrical generation.

Now is the time to take action

Because of the above, the Trump administration should do the following in 2025:

Eliminate federal Green energy subsidies and mandates.
Encourage Red state legislatures and governors to do the same.
Roll back federal regulations that:
1. Make the construction of electric power lines more costly and time-consuming (or impossible).
2. Seemed deliberately designed to cancel all new natural gas plants and force existing natural gas plants offline.
3. Undermine the exploration, drilling, distribution, and sales of crude oil and natural gas.
4. Make nuclear fission far more expensive than it needs to be (or at least not allow the nuclear industry to bring the cost down to the same levels as South Korea and China).
Implement energy innovation prizes to push forward research and development on transformative energy sources (more on this in another article).

I believe that if the Trump administration (or any other administration) does the above, it will kick off long-term economic growth and reduce the chances of an economic recession in the short run.

This article will focus on goals #1 and #2.

Goals for electrical utilities

Electrical utilities should be primarily concerned with:

Keeping electricity prices low, and
Secure enough to avoid blackouts 99.9+%, typically via:
- High percentages of dispatchable electricity generators, such as natural gas, nuclear, and hydro
- Redundancy
- Fuel storage.

Before all these Green energy subsidies and mandates were implemented, electrical utilities did a fairly good job of doing this. But all these federal and state Green energy subsidies and mandates have forced electrical utilities to focus primarily on increasing renewable energy production, and then spend extra money to deal with the “system costs” required to maintain grid stability 24/7/365. This new government-mandated goal almost always undermines the original two goals.

In regions where wind or solar can contribute to those goals, then utilities will purchase their electricity without the need for subsidies and mandates. So, these Green energy subsidies and mandates necessarily increase electricity prices and undermine grid reliability.

System costs make Green energy very expensive

All options to overcome the “system costs” required to maintain grid stability 24/7/365 dramatically increase the total cost of deploying solar and wind power far beyond their construction costs. These system costs are why solar and wind supporters can claim their energy is “cheaper than fossil fuels,” but solar and wind actually increase costs to consumers and industry.

The four primary means to overcome solar/wind intermittency are:

Overbuilding + curtailment (i.e. build far more wind and solar plants than are necessary during peak electricity use and then just do not use the excess electricity).
At the very least, this strategy triples or quadruples the necessary construction cost of solar plants to produce electricity through the Temperate winter, but that still does not deal with no sun at night (50% of the time). So, this option is really only viable in tropical latitudes with high solar radiance and few forests.
Energy storage, primarily using utility-scale batteries.
Advocates for this strategy ignore the the simple fact that utility-scale batteries are extremely expensive. Costs are the same order of magnitude as nuclear reactors, but batteries do not even generate electricity.
Let me give just one example. If we assume that we want to replace just one 1000 MW coal power plant with 12 hours of battery storage (enough for a solar plant to produce enough electricity to get through the night) then that would require 12,000 MWh of utility-scale batteries. Using Tesla’s advertised prices for Megapack, which cost $5,055,940 for a mere 19.3 MWh, then that would cost a whopping $3.1 billion. And this is just one power plant!
In 2023, total global electricity generation was close to 30,000 TWh. And realistically, you have to have battery storage with enough capacity to run the entire electrical grid for days or weeks during the Temperate winter. The days are just too short and cloudy. Even one week’s storage increases the price of storage to $210 trillion or roughly three times the world’s GDP.
Rely on some blend of coal, nuclear, natural gas, and hydro for half the year and nights. So now you have essentially two different energy systems, only one of which is being used at any one time. This is probably the most realistic option, but it is hardly the energy transformation that Green energy advocates are looking for.
A blend of Options 1 and 2. This is still more expensive than Option 3.

Green energy subsidizes the affluent

It gets worse. Green energy subsidies are reverse redistributive policies that subsidize the purchases of upper-income consumers at the expense of taxpayers and electricity consumers. Virtually all of these policies transfer money to above-average-income households or Green energy corporations at the expense of everyone else.

Here is an income profile of solar customers. Sixty-four percent earn more than $100,000 per year, while only ten percent earn under $50,000.

The same goes for owners of electric vehicles.

“Higher-income households (earning over $100,000 annually) account for 56% of EV owners in the United States.
Only 4% of EV owners in the U.S. have a household income of under $25,000 per year…
Approximately 29% of EV owners have a postgraduate degree, while only 18% of the general population holds one.”

Green policies that should be eliminated or radically reformed

Below is a list of federal and state policies designed to promote Green energy policies that should be eliminated as soon as possible. Many of these policies were “good ideas” that made sense at a small scale but then have been ramped up to create alternate economies based on government subsidies rather than market demand for electricity. Many also threaten grid reliability by forcing utilities to favor intermittent electricity generators over dispatchable electricity generators.

At the very least, these policies need to be reformed so that the primary beneficiaries are not affluent households:

Renewable Energy Production Tax Credit (PTC), which gives money to wind and solar production regardless of whether the projects produce useful electricity that is connected to the grid. This leads to “curtailment” where the electricity never gets to the customer.
Renewable Energy Investment Tax Credit (ITC),
Renewable Energy Credits (FEC), which enable energy producers to receive credit for their energy even if they are not directly producing or purchasing renewable energy. This complicated system is riddled with opportunities for fraud.
Residential Energy Credit
Modified Accelerated Cost-Recovery System
Inflation Reduction Act, which dramatically increased many of these subsidies.
Net metering, which typically requires utilities to purchase “extra” electricity from homes that are producing excess solar during the day at consumer prices, rather than the wholesale prices that other energy producers receive. The utilities must do so even if they do not need the extra electricity to meet consumer demand. Particularly during peak solar production, there is a huge price spread between the two prices.
This arbitrage created a massive windfall for above-average income households who could afford to install solar panels, while driving up the price for below-average income households, who could not.
These policies are getting so bad for consumers that even California is rolling them back. At the very least, utilities should only pay wholesale electricity prices, which is what every other electricity generator gets.
Feed-in Tariffs (FIT) which require utilities to pay more for electricity from renewable projects than from other energy producers.
Renewable fuel standards which require all gasoline to blend in ethanol. This mandate:
- does nothing to reduce carbon emissions (and likely increases emissions) and
- encourages farmers to transition away from food production, which raises food prices
- destroys wild habitats.
Renewable Portfolio Standards (RPS), which establish minimum percentages for energy producers and providers of renewable energy. Some state standards include nuclear and hydro, but none include natural gas, the most cost-effective method to replace coal plants.
Clean Energy Standards (CES)
Electric vehicle tax credits from federal income tax.

And, for the record, I would also be in favor of the elimination of subsidies for fossil fuel and nuclear as well, though they are much smaller than Greens claim. I will write more about this in a future article.

The problem is the goal

The fundamental problem with Green energy policy is the goal. Greens want to radically reduce, if not eliminate, fossil fuel usage to get to Global Netzero by 2050.

I believe that the goal of our energy policy should be much broader. Government policies and particularly energy policies should promote the long-term increase in the material standard of living of as many people as possible. Green energy policies do the opposite.

Any energy policy that embraces the concept of human material progress should include the following goals:

Create an energy system that is abundant, affordable, and secure. This will keep human material progress going. This should include both wealthy and developing nations.
Mitigate the negative side-effects of that progress on the natural environment. This includes carbon emissions, air pollution, water pollution, wild habitat destruction, extinctions, and human health concerns.

An exclusion focus on carbon dioxide undermines the first goal and only achieves on part of the second goal. Most importantly, because of their hatred of fossil fuels, Greens ignore other more cost-effective options.

Some possible compromises

If my proposal is too radical for you, I would accept the following as a compromise:

All subsidies to electricity producers be tied specifically to the actual amount of electricity used by consumers rather than the costs to build the plant.
The focus should be on outputs (i.e. electricity used), not inputs (i.e. construction costs).
The current subsidies encourage construction at sites with low levels of solar radiance and/or low wind speeds. This is particularly true when subsidies are combined with state-level mandates. Most states do not have areas with high levels of solar radiance and/or high wind speeds, so the money is just a subsidy for no reason, though construction firms are happy to accept the money.
All subsidies that go to end consumers should be capped by income and the price of the product.
Taxpayers should not subsidize luxury goods for above-average-income consumers. That is reverse redistribution, and it is very bad.
As one example, tax rebates for electric cars should only be for cars with an MSRP under $40,000 and for owners with a declared incomes under $100,000 per year. This would eliminate the vast majority of current electric vehicle owners.
If the federal tax credit for electric vehicles remain, it should also be available for Plug-In Hybrids that get at least 40 miles electric-only range. This type of powertrain offers almost all the advantages of an electric vehicle with a substantially smaller battery. Let consumers choose between EVs and PHEVs, not the government.
All mandates to utility companies should have a clear rank-order priority:

Inexpensive electricity for homes and industries (as the most important goal)
Stable delivery of electricity 24/7/365 with a reasonable standard (say 99.9% delivery)
Less than 50% of the carbon emissions, air pollution, and water pollution of coal (assuming that the two higher priorities are not undermined).
Government subsidies and mandates should not focus exclusively on solar and wind while putting natural gas, nuclear, and hydro-electric power at a competitive disadvantage. Reducing coal combustion makes sense as a goal, but not reducing natural gas power (the most effective means to reduce coal).

As long as utilities can make a reasonable claim that they are using this prioritized list in their decision-making, utilities should be able to choose their own electricity generators. In most cases, this will be natural gas.

I believe that adding these four principles into federal and state regulations will radically reduce their negative consequences. I would prefer to completely eliminate all Green energy subsidies and mandates, but the above seems like a reasonable compromise.

But what about reducing carbon emissions?

The reality is that Green energy subsidies and mandates is not a very effective means to lower global carbon dioxide emissions. I have written dozens of articles on the topic, I will not go into detail here.

If the goal is to radically reduce carbon dioxide emissions in the US electrical grid and provide a solid foundation for the electrification of transportation, then there is far better option. I go into this alternative energy policy in more detail in this article, but my proposal is to swap out all existing coal power plants for very energy-efficient Combined Cycle Natural Gas Turbines (CCGT).

A new CCGT power plant reduces carbon dioxide emissions by roughly 2/3 compared to an old coal power plant. Since these CCGT plants can be run 24/7/365 with only brief shutdowns for routine maintenance, they provide reliable electricity. Since natural gas prices are very cheap, they will also lower the price of electricity in the vast majority of states. This builds a solid foundation for economic growth, particularly in energy-intensive industries. And there is plenty of domestic natural gas production to power those plants for decades to come.

Best of all, my proposal is cheap and fast. The transition could be made in 5 years, and by my estimates, it would cost only $148 billion to replace every American coal plant with CCGT. This is less than 30% of the cost of the recent Inflation Reduction Act of 2022. And since the IRA act was passed, the retirement of coal plants has actually slowed significantly.

Quite simply, neither solar nor wind power can reduce fossil fuel usage globally at scale, but we can swap coal for natural gas cheaply and quickly. Solar and wind have a particularly difficult time decommissioning coal plants.

Below are a few articles where I go into more detail:

A simple and cost-effective plan to quickly lower US carbon emissions

Michael Magoon

September 12, 2024

A simple and cost-effective plan to quickly lower US carbon emissions

Energy policy in the United States and other Western nations is misguided. Currently, virtually all of them are committed to something like Netzero carbon dioxide emissions by 2050. To achieve this goal, it will require the virtual elimination of fossil fuel usage by that year.

Read full story

And if you want to expand this policy overseas then I have a plan for that as well:

Promoting Progress