This is just looney:

Canadian and provincial governments could spend $2.4 billion to build a large scale solar photovoltaic manufacturing plant and then give it away for free and still earn a profit in the long run, according to a financial analysis conducted by the Queen’s University Applied Sustainability Research Group in Kingston, Canada.

Queen’s University Mechanical Engineering Professor Joshua Pearce conducted the study — to be published in the August edition of the academic journal Energy Policy — to find out if it makes economic sense for governments to support solar cell manufacturing in Canada. He was surprised to discover the answer is an overwhelming yes even in extreme situations and feels governments should be aggressively supporting this industry to take advantage of the financial opportunity.

This is pure junk economics. By sponsoring such research, Queen’s University’s reputation as a credible educational institution takes a serious hit. But in currying favour with the McGuinty government, the authors are clearly aware of who spreads the butter on their department’s bread. 

What I don’t get, though, is if these researchers think it so blatantly obvious that governments should support such investments, why don’t they invest their own money in such enterprises? Logically, if their assertion that the business case for solar manufacturing is sound, then providing government support is totally redundant. Private capital should be more than willing to step in to fill the void.

Ultimately, this is just another industrial policy boondoggle. While theoretically, a case can be made for government to support industry in certain circumstances, subsidizing a bunch of branch-plant, solar panel/wind turbine assembly facilities falls far short of the conditions under which that theory might apply. Moreover, in virtually every case where strategic trade theory has been applied (e.g., aerospace), the accompanying rent seeking that goes with it has dissipated any potential “social” return (hello Bombardier).

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