Meanwhile, in neighboring West Virginia, a mere hour from Pittsburgh…
The Mountain State is on track to give a nearly $300 million public subsidy to a company that will manufacture “cutting edge iron-air batteries” in Weirton.
As the statewide MetroNews service reports it:
“The company’s battery technology operates through a ‘reversible rusting’ process. The battery breathes in oxygen from the air and converts iron metal to rust. When the battery charges, the reverse happens. An electrical current converts the rust back to iron, and the battery breathes out oxygen.”
Reports say Form Energy is putting up at least $350 million of private dollars to get the project off the ground at the site of the old Weirton Steel Company.
And as MetroNews reports, “Among Form Energy’s financial backers is Breakthrough Energy Ventures, which includes billionaire investors like Bill Gates, Jeff Bezos and Richard Branson.”
Gates, we are told, has heralded Form Energy’s creations of “a new class of batteries that would provide long-duration storage at a lower cost than lithium ion batteries.”
By the way, all manner of fantastical economic multipliers is claimed, claims that just about always are overstated. The veracity of those benefits already is being questioned.
But this “deal” is fraught with problems.
First is the fact that government, yet again, is turning taxpayers into venture capitalists. While it might be standard operating procedure for government at any level these days, it’s still not right.
Government has no business picking winners that, in the process, creates losers.
Second is the sheer scope of the public subsidy – close to half of the initial investment. As we are wont to say in times such as these, is, if the Form Energy battery plant is such the be-all and end-all sure thing, why are taxpayer subsidies given at all?
Third are the expected government strings that come with such corporate wealthfare, all in the name of “protecting” the taxpayers’ “investment” that will be stolen from their pocketbooks.
This “protection” comes in the form of rank government interventionism that only further perverts the free-market process. That is, government will own Form Energy’s new building(s) and property for not less than five years in a lease-back plan.
All that would transfer to Form only if it employs 750 workers and pays its workers at least $63,000 a year in average salary.
Maybe government also will dictate what color the batteries are and what snacks Form offers in its break room. Ahem.
The point here, again, is that the only business government has in this deal or any deal is get out of the way and facilitate such projects with the lowest amount of fair taxation and least amount of prudent regulation as possible.
There’s a fourth, and very troublesome problem in this deal. It came when the West Virginia House minority leader chided some House Republicans for wanting to start a “no-jobs caucus” for raising very valid points of order.
Among the criticisms from some Republicans – the Form Energy deal smacks of an endorsement of socialist central planning. Indeed, it does.
Both the West Virginia House and Senate have approved the deal; Gov. Jim Justice is expected to sign off, too.
Still, state Sen. Robert Karnes, a Randolph County Republican, called the state financial support a big risk.
“We’ve got a battery company that’s never made a battery. I don’t know how you can call that anything other than a wild gamble,” Karnes said.
But don’t worry. Should Form Energy’s grandiose plan falter, government, owner of the land and new building(s), will step in to pick another “winner” that will be another loser.
The bottom line remains that if this battery plant can’t be built without taxpayer help, it should not be built at all.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
