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Gasoline and

engine was a better technology than the

California has led the nation and the world in

steam engine."1 8 3 Such optimism is tempered

ratepayer and taxpayer financing over the last

diesel are becom-

by the realization that the hydrogen dream is

quarter century. Wind power, solar power,

ing cheaper and

more than a half century old and the petrole-

biopower, and geothermal power have been

cleaner, and

um-based transportation market grows

generously subsidized for electricity genera-

stronger economically and technologically by

tion. Ethanol, methanol, natural gas, and

conventional

the day, despite disproportionately large gov-

electricity have received government largesse

automobile tech-

ernment support for rival technologies. Every

for transportation.

year adds 50 million new conventional vehi-

While many of the subsidies are continu-

nology is meeting

cles, and a net gain of approximately 15 mil-

ing, the verdict is all but in. The victor on the

the needs of both

lion to 20 million vehicles, to a global fleet of

transportation side is reformulated gasoline

lower income

650 million passenger cars and commercial

and the revamped internal combustion

vehicles.1 8 4 With gasoline and diesel becom-

engine, which have proven to be technologi-

and higher income

cally feasible at reasonable cost.1 8 6 The CEC

ing cheaper and cleaner, and conventional

consumers.

automobile technology meeting the needs of

has put alternative transportation fuels on

both lower income and higher income con-

notice in its latest energy plan:

sumers, hydrogen technologies will have to

catch a rising star.

California . . . must consider the

costs to create new or flexible fuel

infrastructures to support new alter-

The Failure of

native-fuel delivery systems, particu-

Government-Promoted

larly for personal transportation.

Alternative fuels will not be viable

Alternative Energy

unless they are readily available and

competitively priced.1 8 7

As demonstrated in the last section, a

mountain of subsidies, preferences, and gov-

ernment-promoted advocacy campaigns has

The victor on the electricity side is natural

gas combined-cycle technologies--despite

failed to sustainably commercialize alterna-

tive energy in the marketplace. The market

$540 million in ratepayer subsidies ear-

share of alternative energies in the trans-

marked for qualifying renewables in the next

four years. The CEC states:

portation economy is not large enough to be

reportable; excluding environmentally incor-

rect hydropower, government-sponsored

By 2015, California is expected to

increase its consumption of natural

renewables account for about 2 percent of

the electricity sector.1 8 5 The failure of alterna-

gas by 1,500 million cubic feet a day

or 23 percent. New power plants are

tive fuels cannot be seen as a failure of gov-

likely to be fueled by natural gas

ernment will. As discussed below, even the

because of economic and environ-

most aggressive government interventions

mental benefits. In many cases, these

have failed to significantly tilt the energy

new efficient plants will replace

economy, given the economic and social pre-

power plants that use as much as

miums required by nonfossil substitutes.

twice the fuel-equivalent per kilo-

The California Experience

watt-hour generated.1 8 8

California, the world's eighth largest econ-

omy, provides a useful test case for the propo-

The state's energy conservation policy,

sition that, with enough government favor,

liberally subsidized through a several-bil-

alternative fuels could reasonably compete

lion-dollar ratepayer cross-subsidy for more

with fossil fuels. In terms of investment and

than two decades,1 8 9 has also moved toward

experimentation with alternative energy,

the market.

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