ISEA Blog

What if Solar Power had Fossil Fuel like Subsidies?

08 Oct 2010 2:41 PM | Michelle Hickey
The Environmental Law Institute issued a report titled, "Estimating U.S. Government Subsidies to Energy Sources: 2002-2008."

Executive Summary
The current energy and climate debate would benefit from a broader understanding of the explicit and hidden government subsidies that affect energy use throughout the economy. In an effort to examine this issue, the Environmental Law Institute (ELI) conducted a review of fossil fuel and renewable energy subsidies for Fiscal Years 2002-2008. This paper and Appendix describe the approach used to identify and quantify the subsidies presented in the accompanying graphic. ELI researchers used a standardized methodology to calculate government expenditures. Where this methodology was lacking or did not apply, ELI researchers calculated subsidy values on a case-by-case basis.
 
Applying a conservative approach, explained in further detail below, ELI found that
 
• The vast majority of federal subsidies for fossil fuels and renewable energy supported energy sources that emit high levels of greenhouse gases when used as fuel.
• 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.
• Subsidies for renewable fuels, a relatively young and developing industry, totaled $29 billion over the same period.
• Subsidies to fossil fuels generally increased over the study period (though they decreased in 2008), while funding for renewables increased but saw a precipitous drop in 2006-07 (though they increased in 2008).
• Most of the largest subsidies to fossil fuels were written into the U.S. Tax Code as permanent provisions. By comparison, many subsidies for renewables are time-limited initiatives implemented through energy bills, with expiration dates that limit their usefulness to the renewables industry. (read full summary and graphs)
 

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