I like the free market as much as the next guy, but I don't think energy policy can completely follow the free-market model. I say that because by the time alternatives make obvious economic sense, it will have already hit the fan so hard that we may not be able to afford the investment in an alternative infrastructure (even less than we can now), and because any private sector development would take years to bear fruit.
Certainly possible and it may be short-sighted, but how on earth would we support incentives for alternative energy in the foreseeable future with the deficits we're running from here to 10 years out at least? Even if we could, I'm highly skeptical of our federal government selecting what to incentivize (we can't incentivize every alternative), the same people who have given us ethanol from corn and to a lesser extent fuel cell cars.
I'm still optimistic alternative energy technology (and scale-up) will coincide with the economics well enough that we get through, 'invisible hand' etc. However, we are definitely gambling on this as compared to most other developed nations, and ultimately someone will prove right and someone wrong.
Plus, I see energy security and independence as a very real and legitimate national security and sovereignty issue. If we allow our dependence on foreign oil to go on because the alternatives don't yet make economic sense, oil producing nations that hate us can take us down without firing a shot.
Except they need our $ even more than we need their oil to maintain their governments, many ME countries have little besides oil. If anything they are more addicted than we are, otherwise they'd have taken us down a while ago. When one OPEC reduces production, another steps in to increase thanks to the additional revenues.
