Last updated on: 2/22/2017 1:13:53 PM PST
Should the US Subsidize Alternative Energies?
General Reference (not clearly pro or con)
The National Center for Policy Analysis (NCPA), a non-profit public policy research institute, wrote in its 2008 report titled "Alternative Energy Overview" on the NCPA website:
"Just as incentives exist for cutting energy usage and demand, they also exist for increasing production in alternative energy to replace fossil fuels. First of all, the U.S. government gives tax credits to consumers to buy cars that run off of alternative energy and to install devices that generate renewable electricity. For instance, through 2010 the EPAct 2005 [Energy Policy Act of 2005] is offering a tax credit of up to $3,400 to individuals who purchase a car powered by electricity, hydrogen and biofuels. Government subsidies also encourage the production of alternative biofuels like ethanol, biodiesel, and methanol."
2008 - National Center for Policy Analysis (NCPA)
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
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
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
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
Lynn Mytelka, PhD, Professorial Fellow, and Radhika Perrot, MS, Researcher and PhD candidate, both at the United Nations University - Maastricht Economic and Social Research and Training Center (UNU-MERIT), wrote in their 2008 Working Paper Series #2008-031 titled "Changing Configuration of the Alternative Energy Systems," available on the UNU website:
"[T]he role of the government becomes important to mitigate the investment risks by providing production incentives and research subsidies as well be involved in accelerating the development of new renewable technologies until the market becomes stable for firms to make profits...
Because of the nature of technologies and their system embeddedness, the role of government funding and policy support are important constituents in transforming the current fossil fuel based energy system to one towards cleaner and greener forms of energy source."
2008 - Lynn Mytelka, PhD
Radhika Perrot, MS
Jonathan Pershing, PhD, Director of the Climate, Energy and Pollution Program, and Jim Mackenzie, PhD, Senior Fellow, both at the World Resource Institute, stated in a Mar. 2004 paper titled "Removing Subsidies: Leveling the Playing Field for Renewable Energy Technologies," available on the World Resource Institute website:
"The existence of market barriers to the introduction of climate friendly technologies provides an example where subsidies may be justified. Renewable energy sources, which often have high initial (capital) costs and concomitant risks, may be subsidized by governments wishing to encourage investments in new capacity or in research to meet environmental or social goals...
Recommendations: To provide for appropriate full life cycle costs, environment-related taxes or charges should be introduced and environmentally harmful energy subsidies removed. Renewable energy subsidies, which meet public goods goals for environment and security, should be adopted."
Mar. 2004 - Jim MacKenzie, PhD
Jonathan Pershing, PhD
The Democratic Governors Association (DGA) wrote the following in a Jan. 24, 2006 report titled "America Competes," available on its website:
"America's economy is hampered by its dependence on foreign oil, which adds to our trade deficit, increases the nation's energy costs, especially for manufacturers, and is harmful to the environment. By dramatically reducing this dependence and investing in domestic sources of energy, we will create jobs, and strengthen the economy. Democratic Governors have made significant strides in the states, but need the federal government to do its part by:
1. Redirecting Oil and Gas Subsidies to Alternative Energy Sources. That money should be invested in other energy sources like alternative fuels, wind, and solar power."
Jan. 24, 2006 - Democratic Governors Association (DGA)
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
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
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
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
Jerry Taylor, Senior Fellow at the Cato Institute, wrote in an article titled "Alternative Energy in the Dock" for the Ripon Society's "Public Policy for Debate" series in the fall of 2007 on the Cato Institute website:
"[T]he underlying premise of energy policy – that the federal government must act to promote alternative energy - is dubious. If investing in alternative energy makes economic sense, investors will make those investments of their own free will because that's how profits are secured in a free market economy. If investing in alternative energy does not make economic sense, investors will rightly eschew those investments. If the government encourages or compels investments in things that don't make economic sense, nobody wins save for the particular parties gaining the subsidy.
Although most armchair energy gurus believe that government subsidy can hasten the day in which alternative energy sources can compete in the market without government help, this represents the proverbial triumph of hope over experience. If the objective of government subsidy is to produce industries that ultimately won't need government assistance, then we have yet to find a consequential example of energy subsidies that have produced the intended result."
Fall 2007 - Jerry Taylor
Ronald R. Cooke, author of Detensive Nation: From Regulation to Leadership, in a Mar. 18, 2005 article titled "Alternative Energy: It's Time to Evaluate Our Options" on the Financial Sense website, stated:
"No proposed energy solution is useful unless it will be economically and structurally viable without government support. No subsidies. No special regulations to encourage production or consumption. Yes, I know. If government preferences, subsidies, military action, and so on were added to the real cost of oil, we would pay at least twice as much as we do for gasoline, diesel, and heating oil fuels. But in the long run, such preferences and subsidies are economically unsustainable. Energy technologies are viable only if they are able to provide us with a solution that can stand on its own under the political, economic, or environmental constraints that lie in our future."
Mar. 18, 2005 - Ronald R. Cooke
John Culberson, JD, Member of the US House of Representatives (R-TX), is quoted in a June 23, 2008 article titled "Culberson Takes on Multiple Wind Power Execs" on the Houston Chronicle website:
"These people in the wind energy business have made their fortunes because they are subsidized by you and me, and the Democrats passed a big energy bill late last year that jacked up taxes on the oil and gas industry by about $14 billion and then handed the money over to the wind energy folks and other industries. That's just dead wrong. We need to eliminate those subsidies. If they can't make it in the free market - particularly with oil at $130 plus - the alternative energy guys can certainly make money if it's a good idea."
June 23, 2008 - John Culberson, JD