Low-Energy Fridays: Why a Tech-Neutral Energy Policy Is Important

These days, energy policy is ultimately about which types of energy are perceived as good versus bad. Some people like renewables and dislike fossil fuels, so they want to craft energy policy to reflect these preferences. Others believe the reverse—that fossil fuels are good while renewables are bad—and want to use energy policy to promote the former while hamstringing the latter. Yet others are all in on nuclear power or geothermal or some other up-and-coming energy source. There are even those who don’t much like energy usage at all.

Here at R Street, we believe energy policy should be technology-neutral. Governments shouldn’t determine which forms of energy are “good” or “bad,” using subsidies and mandates to boost the good while imposing restrictions to hobble the bad. Instead, decisions about the fuel mix should be left to the market as much as possible. 

Given the central role tech neutrality plays in our energy policy philosophy, it’s worth explaining why a technology-neutral approach is so important. Tech neutrality is not simply a matter of abstract fairness, and attempts by government to promote or restrict certain types of energy can become costly for consumers. 

Fundamentally, the reason to pursue tech-neutral energy policy is that we don’t know which types of energy will be most valuable in the future. The use of every type of energy involves trade-offs. Wind and solar provide energy with zero fuel cost, but they are intermittent. Natural gas and coal don’t have the same intermittency issues as wind and solar, but they require fuel to run—making them vulnerable to price shocks or disruptions in the fuel supply chain. Nuclear can provide a steady flow of clean power, but it is capital-intensive and has a unique risk profile. And all energy sources face issues related to cost and market dynamics. 

If energy technology were static, weighing the trade-offs between these different sources of energy would still be daunting. But the reality is even more complicated: Both technological innovation and broader changes in the economy mean that the trade-offs energy sources face today aren’t necessarily the same ones they will face tomorrow.  

For many years, natural gas was considered a high-cost electricity source—so much so that federal law actually prohibited the construction of new gas plants. Now, fracking and other economic changes have made natural gas a relatively low-cost fuel, helping to spur a transition from coal to gas as the backbone of the power system in many regions. Similarly, wind and solar were once niche energy sources valued mainly for their environmental profile. But falling costs have played a role in making them some of the main sources of new power coming onto the grid. Today, a variety of sources from small nuclear to geothermal to hydrogen aim to follow this same path of improved economics and technology to become major players in the market. 

When governments use energy policy to favor or stifle certain types of energy, they are implicitly betting that they know which types of energy will be most valuable in the future. If they are wrong, consumers bear the costs. By contrast, a technology-neutral approach means that society can reap the benefits regardless of which energy sources succeed. Allowing all energy sources to compete fairly allows us to take advantage of the unexpected and places the risk of failure on private investors rather than ratepayers and taxpayers. For this reason, R Street will continue to advocate vigorously for tech neutrality in all aspects of energy policy.