The Heat Is Online

Fossil Fuel Subsidies Dwarf Those for Renewables: Study

 Report: Fossil fuels' subsidies far outpace renewables'

Houston Chronicle, Sept. 19, 2009

WASHINGTON — The U.S. government delivered more than twice as many federal dollars to research initiatives, tax incentives and other programs benefiting fossil fuels than it supplied to renewable energy from 2002 to 2008, according to a report released Friday by two public policy groups.


Over that seven-year period, government subsidies to fossil fuels such as oil, coal and natural gas totaled about $72 billion, according to the study by the Woodrow Wilson International Center for Scholars and the Environmental Law Institute. The center is a non-partisan think tank and the institute describes itself as a non-partisan research group that aims to strengthen environmental safeguards.


The analysis comes as Congress considers an Obama administration proposal to slash tax incentives for the oil and natural gas industry. It could add fodder to arguments from environmentalists and their allies on Capitol Hill that the tax breaks the White House has targeted for elimination are giveaways to an industry that doesn't need the help.


The data also could help color a looming Senate debate on energy and climate-change legislation that would cap greenhouse gases blamed for contributing to global warming.


“With climate change and energy legislation pending on Capitol Hill, our research suggests that more attention needs to be given to the existing perverse incentives for dirty fuels in the U.S. tax code,” said the institute's senior attorney, John Pendergrass.


The report's tab for government spending on fossil fuels includes $2.3 billion to promote research and development of technology to capture and store the carbon dioxide emissions that are released when coal is burned.

Another $53.9 billion was in lost revenue from tax incentives — with the bulk coming from the foreign tax credit companies can claim for taxes or royalties paid to other countries.


Report called ‘ludicrous'


At the same time, government spending on traditional renewable energy sources such as wind and solar totaled $12.2 billion. Another $16.8  billion went to ethanol made from corn.


The environmental group's findings were immediately rejected by American Petroleum Institute President Jack Gerard, who called the study “ludicrous” because it included part of the federal spending on programs that aren't designed to give oil and natural gas companies a boost.


For instance, the study included an estimated $6.2 billion for some of the money spent on the strategic petroleum reserve, the government's stockpile of crude, which was designed as an emergency source in case of a major supply disruption.


The study also included $6.4 billion for a portion of the government's spending on the Low Income Home Energy Assistance Program, which is designed to help low-income households pay their heating bills.


“Do the authors mean to suggest that LIHEAP, which provides heating to some of America's most vulnerable citizens in the winter, should be scrapped?” Gerard asked. “Do the authors mean to suggest that the petroleum reserve program that provides insurance against an unexpected supply crisis be ended?”


Gerard cited calculations by the federal government's Energy Information Administration that found the subsidies for solar energy totaling about $2.82 per million British thermal units, compared with $1.35 for refined coal and 3 cents for natural gas and petroleum.