From: Cato At Liberty
Experience shows that green business subsidies are a green light for misallocation and inefficiency. Subsidy programs seem to prompt company leaders to think:
- “Washington experts say this is a good idea. Let’s do it!”
- “Yeehaw, we’re getting free money. Let’s blow the bank!”
Those sorts of thoughts seem to have steered Southern Company into building a very expressive boondoggle project in Mississippi. The clean coal plant is to include a complex carbon capture system with a 62-mile pipeline. The Washington Post reports:
The only thing the Kemper power plant is burning now is money. The plant has suffered almost every kind of cost overrun, beset by bad weather, labor costs, shortages and “inconsistent” quality of equipment and materials, and contractor and supplier delays. Southern said in April that it was raising the projected cost of the plant by $235 million, to a total of $5.5 billion, more than double the original estimate.
So the Kemper plant yielded to Edwards’ Law of cost overruns. When the government subsidizes large and complex projects, costs tend to double. The Southern plant “received a $270 million grant from the Energy Department and $133 million of federal investment tax credits — though by blowing a deadline, Southern will lose some tax benefits.”
The Post story mentions another company that was led astray by the pied piper of green subsidies: