Renewable Energy Subsidies Dwarf Those Provided Oil & Gas

Institute for
Energy Research

….
….  

Market-distorting renewable energy subsidies, according to the Energy Information Administration, dwarf those allocated to oil, gas and other fossil fuels.

At the request of the Secretary of Energy, the Energy Information Administration (EIA), an independent agency of the U.S. Department of Energy, evaluated the subsidies that the federal government provided energy producers for fiscal year 2016, updating a study that it did for fiscal years 2013 and 2010. Federal subsidies to support renewable energy in fiscal year 2016 totaled $6.682 billion (2016 dollars), while those for fossil energy totaled $489 million—renewables subsidies were higher by almost a factor of 14. The EIA noted that those subsidies do not include state and local subsidies, mandates, or incentives that in many cases are quite substantial, especially for renewable energy sources.

renewable energy subsidies

EIA found that most federal subsidies in FY 2016 support renewable energy supplies (primarily biofuels, wind, and solar) and reducing energy consumption through energy efficiency. In FY 2016, 45 percent of federal energy subsidies were associated with renewable energy and 42 percent were associated with energy end uses (e.g., Low Income Heating Assistance and other such programs). Energy end-use and conservation subsidies declined from $7.7 billion in FY 2013 to $7.2 billion in FY 2016.

Despite renewable energy receiving almost half the federal subsidies, EIA reported that fossil energy in the form of coal, oil, natural gas and natural gas plant liquids made up 78.1 percent of primary energy production in FY 2016. Nuclear power contributed 10 percent, followed by biomass at 5.9 percent, hydroelectric at 2.9 percent, wind at 2.4 percent, solar at 0.6 percent, and geothermal at 0.2 percent.

Total federal subsidies declined from $29.3 billion in FY 2013 to $15 billion in FY 2016. Federal renewable energy subsidies declined from $15.3 billion in FY 2013 to $6.7 billion in FY 2016. The decline in federal renewable energy subsidies was due mainly to a decrease in direct expenditures, which reflects an expired government program that allowed subsidy applicants to receive grants in lieu of tax credits. These grants (Section 1603 grants) were created by American Recovery and Reinvestment Act of 2009. While the application period for this temporary program ended, the outlays for some projects continued into FY 2016.

renewable energy subsidies

The Section 1603 grants decreased by $7.7 billion between FY 2013 and FY 2016. Wind subsidies decreased the most, declining from $6.2 billion in FY 2013 to $1.3 billion in FY 2016. Solar subsidies also decreased, from $5.8 billion in FY 2013 to $2.2 billion in FY 2016. Both wind and solar continue to be eligible for tax credits—production tax credit for wind and the investment tax credit for solar.

Federal subsidies and support for fossil fuels decreased from about $3.9 billion in FY 2013 to $489 million in FY 2016. Subsidies for coal slightly increased, while subsidies for natural gas and petroleum liquids decreased. In FY 2016, certain tax provisions related to oil and natural gas yielded positive revenue flow for the government, resulting in a negative net subsidy of $773 million for oil and natural gas, based on estimates from the U.S. Department of Treasury.

Federal subsidies and support for nuclear energy also declined from $1.4 billion in FY 2013 to $0.4 billion in FY 2016.

Federal Subsidy and Support for Renewable Energy

Renewable energy (including biofuels) comprised 52 percent of total energy subsidies in FY 2013 and 45 percent in FY 2016. In FY 2016, tax expenditures accounted for 80 percent of total renewable energy subsidies. Direct expenditures for renewable energy decreased by 90 percent between FY 2013 and FY 2016 due mainly to the expiration of the Section 1603 grant program mentioned above. Renewable energy tax expenditures declined by $367 million between FY 2013 and FY 2016 due mostly to lower outlays for the production tax credit. In FY 2016, biofuels represented 42 percent of total subsidies for renewable energy while renewable energy used in electricity production represented the other 58 percent.

Among renewable technologies, biofuels received the only incremental increase in FY 2016 subsidy support because of greater U.S. biomass-based diesel production and foreign imports of these products that resulted in an approximately $1 billion increase in tax credits from FY 2013 levels.

renewable energy subsidies

In fiscal year 2016, total federal electricity-related subsidies declined from their FY 2013 value. The amount of the decline is unknown because EIA did not provide a table of electricity related subsidies for FY 2016. However, the largest electricity-related federal energy subsidies were for renewable energy since subsidies for wind and solar each exceeded subsidies for coal and natural gas and petroleum. Wind and solar combined represented 90 percent of the federal renewable energy-related subsidies in FY 2016.

renewable energy subsidies

While EIA did not calculate the subsidies per unit of energy produced in FY 2016, the Institute for Energy Research calculated the federal subsidies and support per unit of electricity production from the information provided in EIA’s report for renewable technologies and nuclear power. Because EIA did not break out the electricity-related subsidies for coal, natural gas, and petroleum from their total subsidies, the subsidy per unit of energy produced could not be calculated for these sources of electricity.

The figure below provides the subsidy costs per unit of production for those technologies that EIA provided relevant data.

On a per dollar basis, government policies have led to solar generation being subsidized by over 95 times more than nuclear electricity production, and wind being subsidized over 12 times more than nuclear power on a unit of production basis.

renewable energy subsidies

Conclusion

EIA’s report shows that on a total dollar basis and on a unit of production basis, solar energy had the highest federal electricity-related subsidy in FY 2016. In terms of all subsidies and sources, renewable energy and end-uses had the largest subsidies. In general, total federal subsidies for energy declined by almost 50 percent between FY 2013 and FY 2016.

Editor’s Note: I am opposed to all subsidies of any kind, but look at the subsidy cost of solar energy compared to everything else and especially, in the first chart at the top of the page, to natural gas and petroleum liquids, which actually went negative in 2016. Solar energy is a total ripoff with respect to both ratepayers and taxpayers. It isn’t even remotely close to competing with gas despite hyped claims to the contrary. 

 

Print Friendly, PDF & Email

6 thoughts on “Renewable Energy Subsidies Dwarf Those Provided Oil & Gas

  1. don’t forget to add to the oil and gas subsidies,
    the millions and billions in clean-up with all the spills,
    leaks, explosions, fires,
    and lives lost
    and lawsuits and
    and health impacts of pollution to water, air, land.
    and the impacts to climate changes ;
    all these impacts have been going for decades and over a hundred years since the first oil well was drilled.

    And when you add all this, then the subsidies to the renewables dwarfs significantly.

    • Vera: You mean all those “health impacts” that somehow do not scare you enough to move to frack – free NY? Your highly amusing statement “all these impacts have been going for decades and over a hundred years since the first oil well was drilled.” : just think without oil, we wouldn’t have been able to read your weekly drivel here.

  2. Vera,

    don’t forget to add the costs of nonsensical law suits, PR Stunts and displays of virtue signalling, costs to clean up the trash left behind whenever you and your pals go set up protests.

    And of course you never ever consider the taxes raised, jobs provided, energy costs managed.

    Impacts like cleaner air, cleaner water (See the Susquehanna River Basin Commission web site), lower CO2 and CH4 emissions . . . all of these impacts have been going on for decades since the first oil well (in PA) and gas well (in NY) came on line.

    What’s the value to society of electric power? You seem to use it. Try living without it. Over one billion people globally do not have access to electricity that is accessible 24×7, and as this information shows, the costs of solar are way above and beyond those of any other power generation source. I live in Broome County, and my electric bills are probably going to go up thanks to solar power. Don’t want it, don’t need it.

  3. don’t forget to add to the oil and gas subsidies,
    the millions and billions in clean-up with all the spills,
    leaks, explosions, fires
    GARBAGE IN AND GARBAGE OUT VERA,
    You know you’re grasping at straws with this idiotic statement. Companies in oil and gas don’t fail like Solar companies.
    http://www.listoffailedsolarcompanies.com

    ,
    and lives lost
    MORE LIVES ARE LOST IN JUST ONE DAY OF TEXTING AND DRIVING THEN IN YEARS OF GAS AND OIL EXPLORATION
    and lawsuits and
    MOSTLY DISMISSED AS FRIVOLOUS
    and health impacts of pollution to water, air, land.
    THIS FEAR MONGERING BS WORKED IN 2008 BUT THE SCIENCE IS ON THE PRO-DRILL SIDE
    and the impacts to climate changes ;
    EVERY FRACK JOB IN THE COUNTRY COULD FAIL, SPILL, EXPLODE…. IT WONT PUT AS MUCH POLLUTION INTO THE AIR AND WATER AS THE VOLCANO IN HAWAII HAS AND WILL OVER THE NEXT TWO YEARS.
    http://www.scientistpredicthawianvolcanatospewpollutionforthe nextwoyears.com
    all these impacts have been going for decades and over a hundred years since the first oil well was drilled.

    And when you add all this, then the subsidies to the renewables dwarfs significantly.
    WHEN WE ADD UP YOUR DATA WE STILL HAVE NOTHING BUT BS

  4. I’m still waiting for Vera to live like they did during the Stone Age. At least the so-called carbon footprint would be smaller and she would be self silenced.

Leave a Reply

Your email address will not be published. Required fields are marked *