Saturday, November 19, 2011

How good is the government at "picking" new technologies?

Not very, if history is any guide:

"Breeder" reactor
Clinch River survived the first round of his spending cuts, in part out of deference to Senate Majority Leader Howard Baker (R-Tenn.), a strong supporter of the reactor, which was in his home state. But finally, in 1983, with the Congressional Budget Office saying the cost might exceed $4 billion, Congress terminated the program. Blueprints had been drawn up, modeling done, components ordered and some ground cleared, but the reactor was never built. The price tag for the federal government: $1.7 billion ($3.9 billion in today’s dollars).

"Clean" coal
After a carbon-capture project in Alaska burned through $117 million during the 1990s, Republican lawmakers tried to give the moribund project another $125 million in 2005. Just this year, the utility AEP, one of the nation’s largest emitters of carbon dioxide, abandoned a pilot project because it was too expensive — even though the Energy Department was willing to kick in $334 million, half the expected cost. A North Dakota project was shelved last December despite a $100 million federal grant.
 Synthetic Fuel
A handful of coal and auto companies tapped the new funds to build a facility that was intended to produce 50,000 barrels a day, the first of what was supposed to be a network of synfuel plants, many on federal lands. But after oil prices leveled off, then fell, in the early 1980s, the project was not economically sound, even with government help. The private partners pulled out.
Hydrogen car
... on the road to the showroom, the hydrogen car made a wrong turn. From 2004 through 2008, the federal government poured $1.2 billion into hydrogen vehicle projects; the Government Accountability Office noted that about a quarter of that money went to “congressionally directed projects” outside the initiative’s original research and development scope. Visitors to General Motors outside Detroit could drive a vehicle powered by hydrogen, but the technology was costly, and there was no infrastructure to support the vehicles. They died in development.

1 comment:

  1. 1) If the project is viable, then investors want to minimise who they have to share the profits with.
    2) If the project is unviable then they want to extract their rents as fast as possible and run.

    (1) is maximized but not allowing the government to help finance.
    (2) is maximized by taking as much government money initially as possible.