Economics of Hydrogen
By Arnold Kling
Lynne Kiesling has written a five-part article on hydrogen fuel cells. She looks at technical issues as well as economic issues, and each part in the series offers insightful analysis.
The last installment questions the wisdom of the Bush Administration’s proposed subsidy for hydrogen fuel development. She writes,
Governments (and corporate bureaucracies, for that matter) have a very poor track record of picking technology winners, and we have little reason to believe that the success rate with hydrogen research will be any different.
It is important to remember that technological change is incremental and evolutionary, and that the most potentially important changes can be very different from what you might have expected at the beginning of the research. Predicting what will succeed and what will be a dead end is difficult, so any policy decisions that steer research along this unknown path could do more harm than good.
For Discussion. Some argue that government’s role in energy markets is justified on ground of the externality of pollution or the risks of relying on
imported oil from unstable parts of the world. If this is true, how might the government encourage a horse race rather than backing the single horse of hydrogen?