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Category — Energy Subsidies

Net Subsidy Analysis: A Better Way to Assess Government Energy Policy

“The net subsidies formulation would be the correct standard for comparing subsidies to different energy sources…. Net subsidies would include not only the monetized value of policies that subsidize the relevant industries but would subtract out the monetized value of policies that penalize those industries.”

While a complete accounting might be difficult, this is not a reason for pretending that it is not necessary. Best estimates should be made.”

Consider the following two quite different verdicts on the winners and losers from U.S. energy subsidy policy, the first from a pro-renewable energy organization and the second from a free-market energy group.

The federal government provided substantially larger subsidies to fossil fuels than to renewables. Subsidies to fossil fuels—a mature, developed industry that has enjoyed government support for many years—totaled approximately $72 billion over the study period, representing a direct cost to taxpayers.

- The Environmental Law Institute, Energy Subsidies Favor Fossil Fuels Over Renewables (September 2009)

Solar is being subsidized by over 1,200 times more than coal and oil and natural gas electricity production, and wind is being subsidized over 80 times more than the more conventional fossil fuels on a unit of production basis.

- Institute for Energy Research, EIA Releases New Subsidy Report: Subsidies for Renewables Increase by 186 Percent (August 3, 2011)

Such highly contradictory opinions characterize the energy subsidy debate. Yet the numbers aren’t really in dispute. What is in dispute is what exactly should be measured and compared.

Today’s Debate

Typically, representatives of the renewable energy industry and environmental advocacy groups cite total dollar amounts without reference to the percentage of total output that the subsidies support (the amount of energy being generated per dollar of subsidy). [Read more →]

November 14, 2013   6 Comments

Eternal Vigilance: Federal Energy Spending Tracker (www.energysubsidies.org)

“Eternal vigilance is the price of liberty. Power is ever stealing from the many to the few.”

- Wendell Phillips (1852)

Government wealth transfers from the many to the few is called the concentrated benefits, diffuse costs problem. Certain companies and projects get the loot–one hundred cents on the dollar–while the rest of us (taxpayers) pay an incalculable fraction per redistributionist dollar.

Democracy is perverted too because the majority would say “no” if directly asked but are far too busy tending to their own (nonpolitical) lives.  Michael Giberson found this in a 1935 book explaining the passage of the Smoot-Hawley Tariff of 1932:

Although . . . theoretically the interests supporting and opposed to legislation . . . are approximately equal, the pressures upon Congress are extremely unbalanced. That is to say, the pressures supporting the tariff are made overwhelming by the fact that the opposition is negligible.

And so the common-good side must mobilize to expose such exploitation that naturally occurs in a mixed economy where organized interests infest government.

Big Government Energy (BGE)

Government goes to those who show up. BGE–wind power, on-grid solar, ethanol, and battery/EVs–are camped in Washington. They are decades into the rent-seeking game because their goods (bads?) depend on it.

That is why their millions of dollars of loot must be tracked and exposed. Enter www.energysubsidies.org, just launched by the Institute for Energy Research (IER) to allow policymakers, government officials, researchers, journalists, and the general public to get the factual story of taxpayer-funded energy subsidies, including federal loan guarantees, grants, and various tax credits. [Read more →]

June 12, 2013   4 Comments

Wind Consequences (Part IV – Subsidies and Emissions)

This post is part of a five-part series on the adverse consequences of imposing industrial-scale wind plants on electricity systems. The series shows that there is no valid reason to pursue the policy of implementing new renewable energy sources in electricity generation, especially wind.

This post provides more information on the subsidies and emissions considerations for the scenarios summarized in Part I. Parts II and III dealt with cost implications. Part V this Thursday will focus on a number of other issues providing a complete picture of wind’s undesirability and unfeasibility in all respects.

Part I also provides links to the rest of the series.

Subsidies

Because subsidy issues are often raised, comparing those for wind and other generation plants, it is appropriate to show their effect on a MWh basis, regardless of the absolute amounts. The subsidy related to producing a useful output is the important consideration, because this is how electricity is generated, used and paid for. Table IV-1 shows this, but at the level that the wind plant owner experiences, not the full costs of wind to society, that is including wind balancing plant and unique-to-wind grid investments. Note the very high wind subsidies, especially relative to this limited view of costs. [Read more →]

September 25, 2012   4 Comments

Energy Subsidies vs. Energy Sense: What Have We Learned in the Past 3 Years?

The U.S. Department of Energy publishes periodic reports (see the latest) on federal government subsidies to energy production in the U.S.  These reports total up the costs of direct financial support for various energy technologies, tax incentives, research related to marketing and implementation and price support.

Federal support for energy in FY 2010 alone includes the following activities:

Direct Expenditures to Producers or Consumers – $14.3 billion. Federal programs involving direct cash outlays that provide a financial benefit to producers or consumers of energy.

Tax Expenditures – $16.3 billion. Provisions in the federal tax code that reduce the tax liability of firms or individuals who take specified actions that affect energy production, consumption, or conservation.

Research and Development (R&D) – $4.4 billion. Federal expenditures aimed at a variety of goals, such as increasing U.S. energy supplies or improving the efficiency of various energy consumption, production, transformation, and end-use technologies.

Loans and Loan Guarantees – $1.6 billion. Federal financial support for certain energy technologies.  .  .  [in particular] innovative clean energy technologies. 1

Electricity programs serving targeted categories of electricity consumers in several geographic regions of the country – $0.6 billion. Theses are primarily activities of the Tennessee Valley Authority (TVA) and the Power Marketing Administrations (PMAs), which include the Bonneville Power Administration (BPA) and three smaller PMAs.

Of this total of over $37 billion, about $21 billion went to energy production, the remaining $16 billion was spent on electricity transmission & distribution, conservation and efficiency and automobile programs.  This paper focuses on federal subsidies to energy production. [Read more →]

November 18, 2011   16 Comments

Energy Subsidies and Big Wind: Sen. Alexander Sets the Record Straight (renewables 50x that of fossil fuels)

Editor note: The full text of the May 18 floor remarks of Senator Lamar Alexander (R. Tenn.) as reprinted in the Congressional Record last week. Subtitles have been added.

“So I ask the question: If wind has all these drawbacks, is a mature technology, and receives subsidies greater than any other form of energy per unit of actual energy produced, why are we subsidizing it with billions of dollars and not including it in [the energy subsidy] debate? Why are we talking about Big Oil and not talking about Big Wind?”

“We have been debating tax subsidies to the big oil companies. The bill proposed by the senator from New Jersey would have limited it to just the big five oil companies even though many of the tax breaks or tax credits or deductions they receive are the same tax credits that every other company may take– Starbucks, Microsoft, Caterpillar, Google, and Hollywood film producers, for example. Many of the other credits look a lot like the [research and development] tax credit or other tax credits all American businesses may receive.

Well, I am one Senator who is very intrigued with the idea of looking at all of the tax breaks in the tax code. There are currently about $1.2 trillion a year in what we call tax expenditures, and those are intended to be for tax breaks we think are desirable. I am ready to look at all of them and use the money to reduce the tax rate and/or reduce the Federal debt. But if we are going to talk about energy subsidies — tax subsidies — we ought to talk about all energy subsidies.

Renewables vs. Fossil-energy Subsidies

Senator John Cornyn of Texas has asked the Congressional Research Service to do just this. It is an excellent study, and I commend Senator Cornyn for asking for it. This is some of what it finds: According to the report, fossil fuels contributed about 78 percent of our energy production in 2009 and received about 13 percent of the Federal tax support for energy. [Read more →]

May 23, 2011   13 Comments