Late last week, the Environmental Law Institute issued a report entitled “Estimating U.S. Government Subsidies to Energy Sources: 2002-2008.”  The report sought to identify and quantify government subsidies to the energy industry over the seven year period between 2002 and 2008.

The report identified over $101 billion in subsidies to the energy industry over the seven years, with over $72 billion in support of fossil fuels and almost $29 billion in support of renewable forms of energy.  The thrust of the report was that mature fossil industries were receiving mush more support than newly established renewable industries and that the renewable industry that received the most support (ethanol) was not necessarily climate friendly.  In particular the report noted that a small number of items were responsible for a large portion of the subsidies:

·         the Credit for Production of Nonconventional Fuels ($14.1 billion);

·         the Foreign Tax Credit (applies to the overseas production of oil which allows energy companies to claim a tax credit for payments that would normally receive less-beneficial tax treatment) ($15.3 billion);

·         the Alcohol Credit for Fuel Excise Tax (the ethanol tax credit) ($11,577);

·         USDA’s corn production subsidy payments (which are received by farmers who use their corn to produce ethanol) ($5,007).

In reviewing this report, my primary observation is that for all we have spent, we have not reduced emissions meaningfully and we are not more secure, either economically or physically.  It also is worth noting that although the bulk of subsidies support fossil fuels, the also represent the bulk of the production.  On a per unit basis, fossil may be getting a much smaller subsidy than renewable. 

We have demonstrated a willingness to commit substantial resources to addressing our energy needs.  Now we simply need to redirect the resources to where they can do more good.

For another perspective on the contents of this report, see today’s entry at the R-Squared Energy Blog.

We also note that we understand that Subsidyscope, a project of The Pew Charitable Trusts, may undertake a systematic examination of government subsidies to the energy industry.  We look forward to the results of that work and hope that it can further inform the energy debate in Congress.

                            ***

Previous Post  

Next Post

WaPo wrong on CES
May 21, 2012

Oops - law of unintended consequences proved again
April 30, 2012

The double-edged shale gas sword
March 26, 2012