Monday, September 24, 2012

The Importance of Understanding the Facts Behind Renewable Energy Subsidies
PFA Environment and Energy Chair Hank Hebel 

Finding adequate financing to fund renewable energy and sustainability can be an extremely difficult task.  Often, we depend on initiatives taken by the federal government to assist in providing those funds to support the accompanying investment.  Subsidies from the federal government are not a new phenomenon, yet campaign rhetoric can distort the facts and make things seem as though the government is “picking winners and losers”.  In regards to energy investment, the government has historically provided subsidies through tax incentives such as production tax credits (PTCs).  PTCs have been extremely important to the recent rise in wind production; however, these credits for the wind industry will expire at the end of the year.  Some may respond that an industry must be made to survive on its own without government support, and while this may be a valid point, it is important to understand the context of energy subsidization in the U.S.  According to a study by DBL Investors, coal, oil, gas, and nuclear industries have received a cumulative total of $630 billion in a variety of subsidies, such as land grants, R&D write-offs, and other tax credits, while the renewables industry has received only $50 billion in government investment.  Yet, much of the subsidization of the coal, oil, gas and nuclear industries is permanently written into the tax code, while many subsidies for renewable energy are appropriated on an annual basis.  Therefore, a true discussion about the government “picking winners and losers” cannot be seriously examined without these facts being fairly represented.  

Check out the DBL study here: