The Clean Energy Disconnect

By: Andrew V. Tignanelli, CPA, CFP®

 I am a big proponent of clean energy for a couple of reasons. First, if I can safely and easily get all the electricity I need without paying a utility company, why wouldn’t I? Of course, the cost of clean energy must be compared to the cost of paying a utility for electric service. Second, clean energy helps me get away from going to gas stations. I do not know about you, but stopping at a gas station is not a pleasant experience, nor is the coffee any good without a lot of flavored creamers. Third, fossil fuels are dirty and have caused an immense amount of environmental damage. It is hard to argue with this, considering just some of the major oil spills, such as BP in the Gulf and Exxon in Alaska. Just considering these three known issues, I would be delighted to see the full incorporation of clean energy. We will eventually get away from fossil fuels, but it will be a few decades in the future, if not more.

The problem, though, is the government.  The government is, of course, far smarter than anyone else, they know what is good for us, and they will see to it that what is right happens. That last sentence was purely satirical humor. Clean energy has been greatly hindered and not encouraged by the government. Listen to the clean energy executives bemoaning the loss of tax credits and how it is existential to the industry. Of course, they are going to say that since they have been drinking the milk of government for years. Is there an economic incentive to build a solar panel that is cost efficient if government promises to give the buyer 30% of their cost back in tax credits? Do you really think technology is dependent on government assistance? Technology companies love government support, since it grossly increases their profitability at the expense of decreasing our affordability. Government can be beneficial, but it must have a mission. Defeating Hitler in WW2 brought forth many new inventions. Going to the moon helped develop many new technologies. When the government, in its infinite wisdom, decides to make grants, allocate tax revenue in support of some industry, or give tax incentives to accelerate an industry, that is when we should all tremble.

I would love for the government to say that we all get a tax break to use a fee-only comprehensive advisor. The first thing most firms would do is raise their fees. No industry should be supported by either government assistance, like universities or healthcare, nor should they be given special tax incentives. All this does is create inflation, like college tuition, which increased five times more than general inflation over the last 45 years, or discourages affordability, like with solar power and autos. BYD in China, with no tax incentives, sells an EV for $15,000 to $40,000, and our companies cheapest is $30,000 to $100,000. BYD is not priced at $15,000 to $30,000 because it is in China, but instead because they needed to make the cars affordable without tax incentives. BYD EV cars are rated as very well-made, and some rate them as well-made as Tesla. They are not allowed in the USA because the government is afraid the BYD affordable cars will destroy our government milk-sucking EV car manufacturers.

We should all insist on a tax system that gives no incentives to any one industry or product. If a product needs government assistance to make it affordable and viable, then that product is not ready to be sold to the public. The government, with no profit incentive, making decisions about which industries to support with either investment or tax incentives is going to be ineffective. Let businesses, investors and customers determine the future of a product. No matter how much it looks like government support is beneficial, the reality will be that their support is merely making someone richer, and it is delaying the best, most effective product.

As Ronald Reagan once aptly said, “The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.’”

Financial Consulate aims to help lessen the worry and burden of wealth management and enhance financial wellness so our clients can pursue relationships and true fulfillment. Choose the professionals at Financial Consulate as your Certified Financial Planners™ (CFP®) to take advantage of our educational, ethical approach to financial planning. Our services are comprehensive, including tax planning, investment planning, retirement planning, estate planning, and more. We operate completely independently and offer fee-only services to keep your vision in line with our recommendations at all times. While we have offices in Hunt Valley, Maryland, Fernandina Beach, Florida, and Gettysburg, Pennsylvania, we serve clients across the nation. To begin your partnership with a trustworthy wealth advisor, please contact Financial Consulate today.