By Ryan M Yonk and Josh T Smith
April 6, 2017
At the signing of his most recent executive order, President Trump expressed sympathy for the failing coal industry and coal country, along with his hope that removing unnecessary barriers and stifling regulation would lead to a revitalization of coal country.
But coal isn’t dying out just because it’s unfairly targeted by regulation, although some regulations make it tougher for coal to compete with cheaper natural gas and other energy sources. Regulations are only part of the coal industry’s problem.
The only real and lasting solution to the problems that coal country faces are not found in new government-granted privileges for coal companies, but rather in innovation, and competition that drives value for consumers.
For example, one of the reasons natural gas has been able to out-compete coal is because of innovations in fracking technology that have dramatically lowered the cost of gas production. Innovations like these drive the economy and are where the solution to coal country’s problems can be found.
As much as they might long for the past glory days of coal country, that approach is fixated on the technology of the past. If those implementing the executive order are not careful, they may miss the potential for innovation to create something new and better for coal country. No policy’s focus should be on the past — successful energy policy must focus on the future.
One way to ensure that focus on the future is by employing permissionless innovation — the philosophy that undergirds the runaway success of the tech industry. Permissionless innovation allows individuals the freedom to innovate and deal with problems as they arise instead of trying to divine what they will be in the future. This is the process that drove much of the technological revolution. Individuals and companies who could experiment and freely compete with each other found new ways to serve the needs of others and revolutionized human life.
The energy sector holds the same potential, but it is stymied by regulation and extensive government support for existing sources. On this point, Trump’s rolling back of regulations may be exactly what the sector needs. But if economic freedom is good for coal, as Trump noted in his speech, it is also good for renewables and any other potential energy source.
It’s certainly true coal has been pushed out by regulators in favor of solar and wind energy. But it’s also true that other energy sources have hit similar hurdles. For example, solar faces significant hurdles due to the design of the grid system. It is the one-way design from producers to consumers that means integrating solar power is difficult and often costly.
Other distributed generation systems run into similar problems with existing rules or the grid’s design. Already, people are designing solutions and calling for updates to the grid, but these attempts run into regulatory hurdles. Slow-moving bureaucrats and entrenched institutions discourage the new in favor of the old.
A truly revolutionary energy policy framework would focus on creating opportunities for innovation in the energy sector. This means doing more than removing barriers to a single energy source’s success. It means removing unnecessary and cumbersome barriers to innovation and development for all energy sources, even ones that may not exist yet.
The key to improving the economy of coal country won’t be anything like its past, unless paired with technological advances. It is not enough to promote old energy sources, and in the case of coal country, old sources of wealth. Individuals must look for the next way to serve others when their old methods become outdated.
Embracing permissionless innovation and getting out of the way of innovation is a wise course of action for policymakers. Prosperity will only be realized through the innovation currently burdened and deterred by regulation.
Ryan M. Yonk Ph.D. is assistant research professor at Utah State University, and one of the founders of Strata Policy. Josh T. Smith is a policy analyst at Strata.
At Strata, we understand the power of ideas and encourage individual development through writing and creative expression. The ideas, stories, and opinions expressed in this op-ed are the author’s and do not necessarily represent the views of Strata.