Government handouts for coal, oil and gas dwarf those for wind and solar.
Environmental Protection Agency Administrator Scott Pruitt recently proposed eliminating federal tax credits for wind and solar power, arguing that they should “stand on their own and compete against coal and natural gas and other sources” as opposed to “being propped up by tax incentives and other types of credits.…”
Stand on their own?
Pruitt surely must be aware that fossil fuels have been feasting at the government trough for at least 100 years. Renewables, by comparison, have received support only since the mid-1990s and, until recently, have had to subsist on scraps.
Perhaps a review of the facts can set Administrator Pruitt straight. There’s a strong case to be made that Congress should terminate subsidies for fossil fuels and extend them for renewables, not the other way around.
A Century (or Two) of Subsidies
To promote domestic energy production, the federal government has been serving the oil and gas industry a smorgasbord of subsidies since the early days of the 20th Century. Companies can deduct the cost of drilling wells, for example, as well as the cost of exploring for and developing oil shale deposits. They even get a domestic manufacturing deduction, which is intended to keep U.S. industries from moving abroad, even though — by the very nature of their business — they can’t move overseas. All told, from 1918 through 2009, the industry’s tax breaks and other subsidies amounted to an average of $4.86 billion annually (in 2010 dollars), according to a 2011 study by DBL Investors, a venture capital firm. Accounting for inflation, that would be $5.53 billion a year today.
The DBL study didn’t include coal due to the lack of data for subsidies going back to the early 1800s, but the federal government has lavished considerably more on the coal industry than on renewables. In 2008 alone, coal received between $3.2 billion and $5.4 billion in subsidies, according to a 2011 Harvard Medical School study in the Annals of the New York Academy of Sciences.
Meanwhile, wind and other renewable energy technologies, DBL found, averaged only $370 million a year in subsidies between 1994 and 2009, the equivalent of $421 million a year today. The 2009 economic stimulus package did provide $21 billion for renewables, but that support barely began to level the playing field that has tilted in favor of oil and gas for 100 years and coal for more than 200.
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