Oil and Gas; Over 13 Times More in Historical Subsidies than Clean Energy

by John Brian Shannon

You know the line — “Renewable energy shouldn’t receive government support. If it can’t stand on its own in the free market, it doesn’t deserve to grow.”


First of all, as you might have gathered from the title, fossil fuel’s historical subsidies are like skyscrapers next to single-family-renewable-energy-subsidy homes. This is, notably, without including the massive indirect subsidies the oil and gas industry receive in unchecked externalities that wreak havoc on our health, our quality of life, and the potential viability of the human species after climate change is done with us.

You can see in this chart below that historical oil and gas subsidies are over 13 times larger than renewable energy (not including biofuels) subsidies:

Over the first 15 years of these energy sources’ subsidies, oil and gas got 5 times what renewables got (in 2010 dollars) and nuclear energy got 10 times as much.

“Nuclear spent an average of about $3.3 billion a year, oil and gas about $1.8 billion, and renewable energy just under half a billion,” DBL Investors Managing Partner Nancy Pfund and Ben Healey recently wrote in “What would Jefferson do?”

You can also look at subsidies as a percentage of the federal budget in this chart:

And oil and gas support hasn’t gone away. In fact, in some ways, it still trumps support for renewables. From Greentech Media:

“The oil and gas industries have Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs), Pfund said, two low-capital-cost ways of financing infrastructure now rapidly expanding in the financial services world. Neither is available to renewables investors, Pfund said, and both cost less than the tax equity funds derived from solar’s Investment Tax Credit (ITC) and wind’s Production Tax Credit (PTC).”

The U.S. government has also played a huge role in subsidizing natural gas infrastructure and technology,” Pfund added. “The combustion turbine was developed for aircraft and heavily subsidized. It was later reapplied to the gas sector.”

Now, furthermore, there are several reasons renewable energy should be subsidized today. Here are 3 big ones:

Clean energy subsidies actually benefit the economy! “A new study,” Pfund noted, “shows the ITC, when you look at it over the life of the credit, by creating these solar leases, provides a 10-percent return to the federal government. They are actually making money through this incentive through the revenues from all the companies in the solar supply chain.” Cutting the wind energy PTC means cutting 37,000 jobs out of the US economy, jobs that create good tax revenue.

We need clean energy subsidies (stronger than the ones we have today) or an adequate price on pollution to address the fact that pollution from fossil fuels is killing us.

Historical subsidies for fossil fuels, as noted above, dwarf historical subsidies for clean energy. It’s only fair that clean energy get to play on a level playing field, with the same level of support that fossil fuels and nuclear have gotten.

It’s pretty simple, actually. Once you look at the facts.

So, next time someone comes to you saying that renewable energy subsidies need to be cut off, please refer them here — Clean Technica http://s.tt/1jRqx

John Brian Shannon

ABOUT JOHN BRIAN SHANNON

I write about green energy, sustainable development and economics. My blogs appear in the Arabian Gazette, EcoPoint, EnergyBoom, Huffington Post, United Nations Development Programme, WACSI — and other quality publications.

“It is important to assist all levels of government and the business community to find sustainable ways forward for industry and consumers.”

Green Energy blog: http://johnbrianshannon.com
Economics blog: http://jbsnews.wordpress.com
Twitter: @JBSCanada

2 thoughts on “Oil and Gas; Over 13 Times More in Historical Subsidies than Clean Energy

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