Last updated on: 9/23/2020 | Author: ProCon.org

Should the US Subsidize Alternative Energies?

General Reference (not clearly pro or con)

The Energy Information Administration, in an Apr. 26, 2018 article, “Renewable Energy Subsidies Have Declined as Tax Credits, Other Policies Diminish,” available at eia.gov, stated:

“Federal subsidies for renewable energy—including biofuels for transportation use and renewable generation of electricity—dropped to $6.7 billion in fiscal year (FY) 2016, a 56% decline from FY 2013. Renewable subsidies in FY 2010 and FY 2013 were approximately $15 billion, more than double FY 2016 levels, as support from the American Recovery and Reinvestment Act of 2009 (ARRA) lessened. Despite the decline, renewable energy continued to receive a large share of total federal energy subsidies, accounting for 46% of the FY 2016 total.”

PRO (yes)

Pro

Richard Bridle, Senior Policy Advisor, Mostafa Mostafa, Energy Policy Analyst, Shruti Sharma, Associate and Energy Specialist, and Anna Geddes, PhD, Energy Program Associate, all of IISD, in a 2019 report, “Fossil Fuel to Clean Energy Subsidy Swaps: How to Pay for an Energy Revolution,” available at iisd.org, stated:

“Fossil fuel subsidies are a key barrier to a transition to a clean energy system. Although linked to a reduction in emissions, their reform alone will be unlikely to deliver the permanent emission reductions necessary to meet climate change targets. A “swap”— reallocating some of the savings from subsidy reform to fund the clean energy transition—could magnify the contributions to long-term, permanent emission reductions, the economy, jobs, public health and gender equality…

Fossil fuel to clean energy subsidy swaps are already taking place—at a global level, fossil fuel subsidies have declined while renewable investments are now greater than investments in fossil fuel-based generation. But the pace of change needs to accelerate considerably. Although fossil fuel subsidies are linked to emission reductions, their reform alone will be unlikely to deliver the permanent emission reductions necessary to meet climate change targets. A swap, reallocating some of the savings from subsidy reform to fund the clean energy transition, could magnify the contributions to long-term, permanent emission reductions while bringing additional economic and social benefits, in particular in relation to jobs, public health and gender equality.”

Pro

Grant Smith, Senior Energy Policy Advisor, and Bill Walker, Vice President and Editor in Chief of EWG (Environmental Working Group), in a July 17, 2019 article, “Federal Energy Subsidies: What Are We Getting for Our Money?,” available at ewg.org, stated:

“Estimates of subsidies vary according to who’s doing the counting: For example, as Oil Change International notes, should the cost to taxpayers for cleaning up fossil fuel pollution be counted as a subsidy? Still, it’s pretty simple: The more taxpayers invest in renewables, the greater the benefits. The more taxpayers prop up fossil fuels and nuclear power, the greater the burdens.

It is past time for the nation to shift tax resources to accelerating the urgently needed transition to clean, renewable power, instead of accelerating the climate crisis and harming public health to boost the profits of the fossil fuel and nuclear industries.”

Pro

Brian Schatz, US Senator (D-HI), stated the following in his June 20, 2016 article “Put Energy Tax Preferences on a Level Playing Field,” available at the Our Energy Policy website:

“[T]here ought to be a level playing field between fossil fuels and clean energy. Right now, fossil fuels subsidies in the tax code, for the most part, are permanent and the clean energy tax credits, for the most part, are temporary. Now, there is a good reason to make tax credits, subsidies, and incentives temporary in the tax code; from a policy standpoint, that requires legislators to reevaluate how a policy is working over time and to make modifications. But when you make a tax incentive permanent, you are never forced to reevaluate your circumstances…

Many of us in Congress are working hard to accelerate the clean energy transformation already underway. And we believe that if subsidies for fossil fuels are permanent, the tax credits for clean energy should be as well. If we can’t make clean energy tax credits permanent, then the fossil fuel industry should only get temporary subsidies that get reevaluated every several years.”

June 20, 2016 - Brian Schatz

Pro

Kate Gordon, JD, MCP, Vice Chair at the Paulson Institute, wrote in her Sep. 14, 2015 article “Why Renewable Energy Still Needs Subsidies,” available at wsj.com:

“If renewable energy is getting so cheap, why do we still need policies and subsidies to support it? Here’s why. Even if they’re now, finally, cost-competitive at the point of sale, low-carbon technologies are still working with an infrastructure—a utility regulatory system, a power grid, a highway system, a combustion engine-centric fueling system—built for a world powered by fossil fuels. These massive infrastructure projects were built up with public-sector support, including tax credits, low-cost loans, and outright grants from the federal government. Companies designing new energy sources, in contrast, often have to build their own infrastructure and factor it into their costs…

Not only was the playing field built for carbon-intensive energy technology; it is still tilted strongly in that direction by ongoing government subsidies for fossil fuels. Despite the pledge by G-20 countries in 2009 to end handouts for fossil fuels, those subsidies continue to grow. Here in the U.S., the International Monetary Fund has found that the government provides $700 billion a year in subsidies to fossil fuel companies, equivalent to every American handing these companies a check for $2,180 each year.

The world’s citizens are increasingly clear about the major risks we face by continuing our dependence on carbon-intensive energy sources. Innovators and entrepreneurs are stepping up to the plate with amazing new low-carbon technologies to move us forward in a more sustainable direction. But just as with any other major economic transition—the Industrial Revolution, the Marshall Plan, the fall of Communism—there is a role for government policy, finance and investment in speeding the adoption [of] the new, while easing the phaseout of the old.”

Sep. 14, 2015 - Kate Gordon, JD, MCP

Pro

Elliott Negin, MS, Director of News and Commentary at the Union of Concerned Scientists (UCS), stated the following in his Apr. 25, 2014 article “The Time for Wind and Solar Energy Is Now,” available at the Huffington Post website:

“To get where we need to go, the federal government has to turn its outdated energy subsidy policy on its head. The oil and gas industry has been enjoying average annual subsidies and tax breaks of $4.86 billion in today’s dollars since 1918, according to a 2011 analysis by DBL Investors, a venture capital firm. The nuclear industry, DBL found, benefited from an average of $3.5 billion a year in subsidies from 1947 to 1999. And coal, which has been getting federal and state subsidies since the early 1800s, currently receives at least $3.2 billion a year, according to a 2011 Harvard study.

Renewables, on the other hand, averaged only $370 million a year in subsidies between 1994 and 2009, according to DBL. The 2009 stimulus package did provide $21 billion for renewables, but that support barely began to balance the scales that still tilt toward fossil fuels.

So after subsidizing coal for more than 200 years and oil and gas for nearly 100 — which inadvertently got us into this mess — it’s long past time to take fossil fuels off the dole and go all out to promote renewables.”

Apr. 25, 2014 - Elliott Negin, MS

Pro

Edward Guinness, MA, Co-Manager of the Guinness Alternative Energy Fund at Guinness Atkinson Funds, stated in an Oct. 29, 2007 article titled “Q&A with Fund Managers of Guinness Atkinson Alternative Energy Fund,” available at the Alt Energy Stocks website:

“The subsidies in place allow the [alternative energy] industry to grow and technologies to be developed and mature and drive costs down…

Alternative energy is most developed in countries where government subsidies have been in place for some time. Germany put in place strong incentives in the early part of this decade to encourage demand for solar modules, to encourage installations of wind farms and to support the biofuels industry. Companies in countries with a more progressive alternative energy policy framework therefore developed technology and intellectual property at an earlier state. Other European countries such as Denmark, Spain and Portugal also embraced alternative energy therefore companies tend to be more mature in Europe. However the potential for growth in the U.S. is greater, and once a longer term framework has been put in place, we would expect the U.S. to catch up fast.”

Oct. 29, 2007 - Edward Guinness, MA

CON (no)

Con

America’s Power, a coal-oriented trade organization, in an Apr. 17, 2020 article, “It’s Time to End Subsidies for Renewable Energy,” available at americaspower.org, stated:

In order to promote the growth of renewable electricity sources, such as wind and solar, the federal government has given them special tax incentives. Chief among these are the production tax credit (PTC), which has been used primarily by wind generation and awards a substantial tax credit for every megawatt-hour (MWh) produced; and the investment tax credit (ITC), which is primarily used by solar electricity generators as a credit against construction costs. PTCs and ITCs can amount to more than one-third of the cost of building and operating wind and solar facilities…

The following are reasons renewable subsidies should not be extended.

Over $100 billion has already been spent on renewables subsidies…

Wind and solar are no longer at a cost disadvantage…


Even the renewables industry says subsidies are no longer needed…

Subsidized renewables have distorted the electricity grid…

Federal subsidies for renewables have not lowered consumer electricity costs…

A large portion of subsidies are sent overseas…

There is no longer a compelling reason to extend federal subsidies for renewables.”

Con

Katie Tubb, Policy Analyst for the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation, in an Mar. 6, 2019 article, “Congress Should Keep Its Promise to End Energy Subsidies,” available at dailysignal.com, stated:

“Targeted tax credits have become a popular way for government to award special treatment and artificially attract private-sector interest to politically favored and well-connected industries. In short, they’re nothing more than subsidies doled out through the tax code. Not only is this fiscally irresponsible, but Congress also does no service to these energy technologies and companies in the long run by subsidizing them.”

Con

Jeffrey Dorfman, PhD, Professor of Agricultural and Applied Economics at the University of Georgia, stated the following in his Sep. 1, 2015 article “Solar Industry Admits Green Energy Only Exists Thanks to Government Subsidies,” available at forbes.com:

“For at least the last thirty years the alternative energy industry has been claiming they are almost ready to be economically competitive with fossil fuel. Wind, solar, geothermal, and others keep begging for government subsidies to help them stay afloat until they can reach a size at which economies of scale kicks in, price per kilowatt hour drops, and then they can survive on their own. Now we are seeing this has been a blatant grab for taxpayer dollars and the subsidies were more about industry executives and shareholders getting rich than about reaching a green industry future…

How big an assist has solar been getting in competing economically? Quite a large assist. Solar installations, both residential and commercial, receive a 30 percent investment tax credit, meaning solar makes economic sense even when they are 29 percent more expensive than alternatives. A 30 percent subsidy can make a Mercedes cheaper than a Hyundai … Give solar some credit. It has cut costs by about two percent per year for over thirty years straight. The industry now installs as much solar capacity in a month as took five years just a decade ago. These are tremendous gains in scale and in cost efficiency … So, after all those successes, why is solar still so uncompetitive that the industry would suffer catastrophic damage without government largess? Personally, I am beginning to think that thirty years of promises may have been hollow. How long are taxpayers supposed to put up with promises of ‘just a little bit longer’ when asking how long the subsidies must continue?…

The time has come to use the industry’s own admissions against it in the court of public opinion. The industry is lobbying for an extension of its investment tax credit so it can continue to profit at the taxpayer’s expense. Taxpayers ought to lobby their elected representatives to allow the solar tax credit to expire. Tell Congress enough is enough. It is time for solar to face the marketplace on its own.”

Sep. 1, 2015 - Jeffrey Dorfman, PhD

Con

John W. Nikolaou, Former Research Associate at the Texas Public Policy Foundation’s Armstrong Center for Energy & Environment, and Vince Ginn, PhD, Economist in the Center for Fiscal Policy at the Texas Public Policy Foundation, stated the following in their Aug. 4, 2016 article “The Renewable Energy House of Cards,” available at the Real Clear Energy website:

“The International Energy Agency (IEA) recently released a report agreeing with the renewable industries’ dual claim that even though technologies like wind and solar power are now cost-competitive with conventional energy sources, governments should continue to subsidize them. This rhetoric suggests that American taxpayer dollars should continue to prop up the profitability of select companies compared with what the free market would objectively and more efficiently determine…

As with the financial sector, renewables have had a boom led by government intervention and hedging that may ultimately bust as markets can’t efficiently work. This would not only threaten the reliability and price of electricity, but it would also come at the expense of taxpayers. Further, the IEA’s assertion to subsidize renewables to keep them cost-competitive makes the strongest possible statement against subsidizing them.”

Aug. 4, 2016 - John W. Nikolaou

Con

Calvin M. Hoy, PhD, Professor of Economics at the County College of Morris, in a Mar. 24, 2008 New Jersey Online article titled “No Subsidies,” wrote:

“Artificial governmental incentives such as subsidies, tax credits, mandates and tariffs should be removed. In the search for alternate energy sources, we are better served when firms in the competitive marketplace seek profits at their own risk.

In the competitive marketplace, firms can only procure profits for themselves by conferring benefits on others. However, with government assistance, firms can make themselves better off without conferring any benefits on anyone, that is, other than themselves.”

Mar. 24, 2008 - Calvin Hoy, PhD

Con

Ben Lieberman, JD, Senior Policy Analyst in Energy and the Environment, and Nicolas D. Loris, Research Assistant, both at the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation, wrote in a July 28, 2008 article titled “Energy Policy: Let’s Not Repeat the Mistakes of the ’70s,” available at the Heritage Foundation website:

“Several recent bills would either subsidize or mandate alternative fuels and/or vehicles. However, the 30-plus-year history of federal attempts to encourage such alternatives includes numerous failures and few, if any, successes…

After all these years, Washington has failed to grasp the serious economic and technological shortcomings of these energy alternatives, which is why they needed special treatment in the first place. Federal efforts to pick winners and losers among energy sources—and to lavish mandates and subsidies on the perceived winners—have a dismal track record relative to allowing market forces to decide the direction of energy innovation.”

July 28, 2008 - Ben Lieberman, JD Nicolas D. Loris