Energy Subsidies USA

[Bruce551]

How Do Subsidies for Renewables Rank?

Evaluating federal energy subsidies is something akin to alchemy. The myriad of ways in which they are funded, managed, and monitored, and year-to-year changes in legislation and budgets make an exact accounting difficult. This said, the Environmental Law Institute (ELI) recently completed a study for the period 2002 through 2008 in conjunction with the Woodrow Wilson International Center for Scholars which, coupled with the MISI study, illuminates how federal energy subsidies affect renewables and other competing fuels.

These studies confirm conventional wisdom that fossil fuels have been the primary beneficiary of federal energy subsidies.

Oil and gas garnered 60 percent of an estimated total of $725 billion in federal assistance between 1950 and 2003, with oil alone taking 46% of the total. Coal took 13 percent. Next was hydroelectric at 11 percent and nuclear at 9 percent, not counting the liability cap subsidy which is an implicit avoided cost and impossible to quantify. At the back of the pack are wind, solar, geothermal, and bio-fuels, recipients of only 6 percent of total energy sector spending during this period.

Given the recent vintage of renewable technologies, use of a 1950 baseline for breaking down how federal energy subsidies have been parceled out may not paint a fair picture. However, the more recent 2002 ? 2008 period (the Big W. era) continues to show fossil fuels as dominant. According to ELI, subsidies to fossil fuels totaled $72 billion, with most going to oil and then gas.

Support for coal-carbon capture and storage received $2.3 billion of this total.

Fossil fuels took almost two-and-a-half times more in subsidies than renewables, which received $29 billion. Furthermore of this $29 billion, $16.8 billion went to corn-based ethanol whose climate friendly credentials are increasingly open to question.

Only $12.2 billion, or 16.6 percent of what fossil fuels received went for wind, solar, geothermal, hydropower, and non-corn based biofuels and biomass.

This is better than in preceding years but much less than what is needed in the face of global warming, a point understated by ELI Senior Attorney John Pendergrass when he introduced the ELI study?s results by saying ?These figures raise the pressing question of whether scarce government funds might be better allocated to move the United States towards a low-carbon economy.?

Rejoinder to the Rap Against Subsidies for Renewables

Critics argue that renewable energy technologies cannot compete on price with fossil fuels without public subsidies.

It?s true to date that renewables? return per dollar of federal assistance remains higher than for fossil fuels. According to the U.S. Energy Information Administration (EIA), federal subsidies for conventional coal generated electricity production in 2007 equaled $0.44/MWh (megawatt-hour). The equivalent figure for wind was $23.37 and for solar, $24.34 per MWh.

But these critics miss the mark. Commercial scale federal subsidies for renewables are less than twenty years old, dating to production tax credits enacted under the Energy Policy Act of 1992 to bolster national energy security in the aftermath of the first Gulf War.

Furthermore, production tax credits for renewable energy have been subject to on again, off again congressional approval. This contrasts with fossil fuel subsidies, recipients of largely continuous and predictable subsidies since 1917.

Nor are the costs of subsidies for renewables out of line with other emerging and evolving clean energy technologies.

For example, federal subsidies for refined coal technology that removes moisture and certain pollutants from sub-bituminous and lignite in 2007 equaled $29.81/MWh.

If refined coal and FutureGen are any indication, yet untested clean-coal carbon sequestration will require vast federal expenditures on a scale probably surpassing what has been directed to wind and solar.

Renewables do not export environmental externalities such as drinking water contamination stemming from coal mining in West Virginia and other states, as recently reported in the New York Times.

There is no need for a liability cap with wind and solar of the sort needed to fuel investment in commercial nuclear generation.

The reality is that federal subsidies for renewables have played an important role in generating economies of scale and investment capital for improved technology that have driven down the cost of photovoltaic solar energy by 50 percent to about $3 per watt in the past decade and dropped the cost of wind generated electricity to as low as 4 cents/kWh per in some areas today.  These costs will only decline further as the market for renewables grows and technology improves.

Former longtime Saudi oil minister Sheik Zaki Yamani once famously said "the Stone Age did not end for lack of stone, and the oil age will end long before the world runs out of oil".

Now would be a good time for critics of renewable energy subsidies to get the rocks out and for the U.S. to put in place long term federal subsidies that will provide the stable and predictable investment climate needed to accelerate America?s transition to a modern and clean renewable energy economy.

http://www.renewableenergyworld.com/rea/news/article/2009/11/the-federal-energy-subsidy-scorecard-how-renewables-stack-up?cmpid=WNL-Wednesday-November4-2009

That US Congress, their a tricky bunch, you have watch em close. Truly amazing that President Obama can get anything accomplished.

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