Economic Freedom Means no Subsidies for any Energy Source

The Marcellus Works proposal is a package of seven bills designed to incentivize natural gas vehicles through a combinations of tax credits and government loans. The bills include:

  • HB 1083 – Creates tax credits for private natural gas fleet vehicles.
  • HB 1084 – Creates a grant program for smaller mass transit agencies to purchase natural gas buses.
  • HB 1085 – Creates a revolving loan program for large mass transit agencies to buy natural gas buses.
  • HB 1086 – Requires 25 percent of all new bus purchases by large mass transit agencies (SEPTA, PAT, Lehigh) from 2012-16 to run on natural gas; 50 percent in 2017-2021; 75 percent in 2021-2026; and 100 percent by 2027.
  • HB 1087 – Creates a natural gas corridor tax credit to encourage the construction of natural gas fueling stations along I-76, I-78, I-79, I-80, I-81, and I-83.
  • HB 1088 – Dedicates the Alternative Fuel Incentive Fund to grants for municipalities, schools, and the private sector for the purchase of natural gas vehicles.
  • HB 1089 – Repeals California Air Resources Board (CARB) section 2030 to eliminate costly duplication of EPA and CARB certifications for natural gas vehicles.

The program, except for HB 1089, is a package of subsidies and handouts, similar to the many government handouts for solar and wind production. Lawmakers are justifying the program and its estimated $60 million price tag by claiming no one will use natural gas as a fuel unless they sweeten the pot:

Right now we are suffering through a chicken and the egg problem, Rep. Stephens said. Nobody is buying natural gas vehicles because there is no place to refuel, and nobody is building re-filling stations because nobody is buying natural gas vehicles. This legislation will help move us forward by addressing both of these problems.

Pennsylvanians are smart enough to make their own decisions. Yes, the lack of fueling stations may discourage some at first, but if natural gas is such a cost-effective fuel with environmental benefits, then companies will make the investment. Likewise, if transportation authorities or businesses with large vehicle fleets can save money by switching to natural gas powered vehicles (as proponents claim), they should do so without state subsidies.  No on needs to be paid to save money.

Government subsidies—despite their good intentions—create economic bubbles and perverse incentives to lobby for more aid rather than improve efficiency.  Natural gas vehicles should succeed or fail on their own merit.  Lawmakers should stop trying to pick and choose winners among energy sources.