The issue of
subsidies for renewable energy is a concern to me as well as to most people, so
I have begun to research this topic in more detail. Although the message we
frequently hear is that renewable energy sources are receiving too much in
subsidies, what I have found in various studies is that when taken in the
context of a longer period of history, all energy sources have benefited from
significant and long-term subsidies.
One of these studies
is a September 2011 report, titled "What Would Jefferson Do? The
Historical Role of Federal Subsidies in Shaping America’s Energy Future",
by DBL Investors. (See a link to this report and others on the Plano Solar Advocates
"Resources" page in the section titled "The Subsidy
Topic".)
The research
reported in this paper states that through the end of 2009, the energy sector
receiving the largest subsidies over time has been the oil and gas industry,
with a cumulative amount of $447B over the period of 1918-2009. This averages
approximately $4.9B per year for 90 YEARS! It is no surprise that the
technological revolution allowing for the cost-effective extraction of natural
gas from shale occurred thanks to more than three decades of government
subsidies for research, demonstration, and production. (See “New Investigation
Finds Decades of Government Funding Behind Shale Revolution”, December 20,
2011, http://thebreakthrough.org/archive/new_investigation_finds_decade).
The DBL Investors
report states that renewable energy sources, including wind and solar combined,
have received a cumulative of just $6B during the period of 1994-2009, which
equates to an average of $370M per year over 15 years.
We usually don't
hear this historical context when subsidies for renewables are being questioned
and debated. Subsidies for newer energy sources appear to be much
more “visible” to us. Subsidies for existing energy sources appear to
be “invisible” to most of us because they are included in existing tax
regulations and permanently on the books, not up for review on a regular basis.
So, if we think we
must phase out subsidies on renewable energy sources any time soon, shouldn't
we first make sure that subsides for other more mature energy sources are
phased out first?
I will be continuing
to research this topic to learn more. I think one of the good ideas that
has been studied is to take a long term view, with a subsidy ramp down over a
period of time (e.g. over 5 years) whether than ending abruptly at the end of a
given year. This approach would give
business and industry a planning horizon that incentivizes further process
improvements and cost reductions. The current renewable energy subsidy approach
does not do this.
Please share your
views and any research that you may find on this topic by providing comments to
this blog posting.
Best Regards,
A Plano Solar Energy
Advocate (LH)
