More On Fuel Cell Research Subsidies

An editorial in the Wall Street Journal today on the proposed fuel cell subsidies (subscription required) cuts right to the heart of the matter:

But politics aside, this is bad public policy. Hydrogen fuel cells are an encouraging field of research. So encouraging, in fact, that the finest minds in the private sector — auto makers, oil companies, private technology firms — have been studiously working on them for decades. These smart innovators have had some notable technical breakthroughs; car companies such as Honda even have produced (very expensive) prototypes.

Which is all the more reason taxpayers shouldn’t be forking more over to the effort. Granted, there are areas where government research funding serves a purpose — particularly in fields where there is little or no commercial market to drive development. But private companies clearly think they stand a chance to make money from fuel cells; if a market exists, they’ll find it, without Washington throwing money at them.

The real challenge facing the industry today is whether it can make fuel cells affordable. Even the most efficient prototype fuel cells generate electricity at a cost of between $800 and $1,000 per kilowatt hour, when the magic affordability number needs to be closer to $12. The best chance to lower these numbers is to let industry run its own course, experimenting with smaller, more manageable uses for fuel cells such as in laptops or mobile phones — rather than rushing as one to make the President’s miracle car.

Very well said. Think about the opportunity cost — why should we subsidize efforts that private companies are willing to undertake, when resources are scarce?