Environmental Bootleggers and Baptists Fleece Consumers

by Gordon Tomb

The “Bootleggers and Baptists” of Pennsylvania’s energy markets cost consumers and taxpayers billions while undermining the state’s economy and power grid.

Bruce Yandle, an economist, coined the unlikely pairing to describe the whys of “protective regulatory cocoons” based on the prohibition of Sunday alcohol sales. The Baptists, write Yandle with coauthor Adam Smith, “enable accommodating politicians to say the action is the ‘right’ thing to do,” and the Bootleggers “laugh all the way to the bank.”

In Pennsylvania today, two different—but equally unlikely—allies are coming together to advance energy regulation.

Our Baptists are the environmentalists insisting that solar and wind replace coal and gas to avert a climate catastrophe. The Bootleggers include “green” technologies and utilities lobbying for taxpayer subsidies and government mandates to up their profits.

These two groups have successfully advanced regulations like the state’s Alternative Energy Portfolio Standards (AEPS). AEPS requires a percentage of electric sales to come from solar, wind, and other sources that don’t include generating plants powered by fossil and nuclear fuels.

They’re also pushing for Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI), an annual carbon tax approaching $1 billion—which would likely subsidize the Bootleggers’ capital projects.

Their clout comes from the billions that fund “green” projects, lobbyists, and political campaigns. The top 25 nonprofit organizations aligned against the fossil fuel industry reported 2021 revenue of $4.5 billion, four times the amount held by the top groups supporting hydrocarbon use, according to energy writer Robert Bryce.

As for government handouts, the federal Inflation Reduction Act alone provides $10 billion in “green” tax credits, some for projects at closed coal facilities. Presumably, enterprises shuttered by the favored policies of Baptists and Bootleggers could be enticed by tax incentives into bootlegging themselves.

But AEPS and RGGI, along with “green” tax credits, don’t live up to the promises of environmentalists.

After more than a decade of AEPS charging billions of dollars to consumers to encourage the use of wind and solar, the two technologies account for less than two percent of Pennsylvania’s electric generation. And in states that have already implemented RGGI, the carbon tax has had no measurable effect on global temperatures. In fact, Pennsylvania’s increased use of natural gas for power generation reduced emissions of CO2 by a larger percentage than the declines in RGGI states between 2007 and 2019.

Furthermore, these regulations have contributed to the early closure of coal-fired power plants, the disinvestment of natural gas development, the weakening of power-grid reliability, and job losses in the conventional energy industry.

Government subsidies give wind and solar operators an unfair advantage—allowing them to submit bids as low as zero dollars into the power-grid market and making it impossible for other plants to compete.

And although lawsuits have delayed RGGI’s implementation, its threat led to the announced closing of the Homer City Generation Plant, Pennsylvania’s largest coal-fired facility. The shutdown would be the most recent of many in the past few years.

Testifying last year in a state Senate hearing, boilermaker Sean Steffee said Pennsylvania building trades had constructed $14 billion in new gas-fired power plants in the decade prior to RGGI’s introduction in 2019. “We have not built one since and, under the RGGI tax, it is highly unlikely we will build another in Pennsylvania,” he said.

Already in 2023, the construction of a $1 billion gas-fired plant in Clinton County was cancelled after eight years of planning. Despite natural gas being one of the cleanest fuels, environmental groups challenged the project’s air-quality permit.

Power grid operators have flagged early retirements of coal plants as a threat to system reliability. The Power PA Jobs Alliance repeatedly warns of higher electricity prices and severe job losses if RGGI moves forward.

It’s thanks to the alliance of environmentalist groups and promoters of “green technology” that reliable electricity sources are being replaced by expensive, intermittent ones—even as energy prices increase and jobs are destroyed.

Yandle and Smith explain the moral hazard: “Lobbying for pork often pays a whole lot better than struggling to bring new and better products to market—at least in the short term. Put another way, political incentives cause Bootleggers and Baptists to become anti-capitalists, participating in … ‘crony capitalism.’”

Indeed, environmentalist Baptists remain forgiving of green energy subsidies to business while Bootleggers just keep laughing.

This commentary was first published at Real Clear Energy, April 24, 2023, and can be accessed here.

Gordon Tomb is a senior fellow with the Commonwealth Foundation and a senior advisor with the CO2 Coalition in Arlington, Va.

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