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

By Roy Cordato -- November 14, 2013

“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.