EARTH TALK ; the U.S. Subsidizes All Forms of Energy, Including Fossil Fuels
Dear EarthTalk: Renewable energy production in the solar and wind markets currently receives about $7 billion in government subsidies annually but is still not competitive against fossil fuels on a large scale. To what extent should the U.S. continue to prop up these industries as they compete against dirty energy? - Jack Morgan, Richmond, Va.
Given the importance of abundant amounts of energy for Americans, the federal government tends to subsidize all forms of energy development, including fossil fuels and renewables.
A recently released report by the Congressional Budget Office (CBO) found that in 2011 the federal government spent $16 billion of our tax dollars in subsidies for the development of renewable energy and increased energy efficiency, and only $2.5 billion in subsidies to the fossil fuel industry in the form of tax breaks.
But this breakdown in favor of larger subsidies to alternative renewables is a recent product of President Obama's stated goal of cutting back on subsidies to the hugely profitable oil industry.
Historically, the vast majority of energy subsidies have gone to developing fossil fuel resources and reserves. The CBO notes that until 2008 most energy subsidies went to the fossil fuel industry as a way to encourage more domestic energy production.
A report by the non-profit Environmental Law Institute (ELI) confirms that, between 2002 and 2008, 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," reported ELI. "Subsidies for renewable fuels, a relatively young and developing industry, totaled $29 billion over the same period."
Even though subsidies to the oil industry may be down substantially from what they once were, the Obama administration and many others would like to see any such subsidies to the oil industry stripped completely. …