Wind Power Subsidies Don’t Compare to Fossil Fuel & Nuclear Subsidies
Big Oil
Daniel J. Weiss and Valeri Vasquez had an excellent piece recently on the “facts of Big Oil’s tax loopholes and windfall profits.” The whole piece is worth a read and shows why, despite broad public support (including Republican voter support) for ending oil and gas company subsidies, the companies continue to receive billions from US taxpayers (hint: institutionalized political bribery). However, I’m just going to pick out the bit on Big Oil tax breaks (which were kept in place this year primarily by Republicans in Congress):
- $4 billion: Cost of Big Oil tax breaks in 2011.
- $2 billion: Cost of Big Oil tax breaks eliminated by S. 940.
- $77 billion: Cost of Big Oil tax breaks from 2011 to 2021.
Big Oil has raked in billion in tax breaks for decades, but I am not sure of any specific total.
Would love more info on this from any informed readers who have come across it (or worked hard to track it down).
Of course, a subsidy is also the “failure to impose external costs” (mentioned above) related to global warming, national security, protection of “our” oil supply in foreign countries, and price volatility. Add all that in and I’m sure the subsidies increase many, many times over.
Coal
Coal-fired electricity causes tremendous damage to our health and to the environments we rely on to live. Now, if the implications of that aren’t clear enough, that means billions of dollars spent by individuals (for sicknesses they wouldn’t have had otherwise, not to mention premature death), and billions of dollars spent by government to help people deal with such problems and to try to clean up the mess created by the coal industry. And, lest you forget, those billions of dollars of government money came from taxpayers. The costs of coal are not in your electricity bill, but they are in your health insurance bill and your tax statement.
We covered a report out by Harvard Medical School on the “full” cost of coal earlier this year, for example. The basic conclusion is: not even taking direct subsidies into account, but only looking at health and environmental costs, we pay up to half a trillion dollars a year in the US for power from coal. This brings the cost of coal power up to 9 –27 cents per kilowatt hour (kWh). In case you missed it above: Yes, our “failure to impose external costs” is a subsidy!
Beyond these external costs (which already makes coal more expensive, unsubsidized, than wind), the coal industry also had tons of historical investment by the federal government to make it scale, just like every major power industry. I haven’t seen specific figures on this, so I won’t say much more on that, but an often overlooked point is that coal didn’t get off the ground without massive federal support and historical subsidies are really something we should take into account when discussing the subsidies given to wind (and other new technologies).
Furthermore, coal still gets billions of dollars in subsidies despite being an excessively mature industry.
But let’s move on and take a look at the historical subsidies of nuclear power….
Nuclear
On nuclear, I’m going to excerpt at length a piece from 2008 by Charles Komanoff. It clearly shows that, at a minimum (not even including costs to society from potential reactor accidents… which do and will continue to happen), federal subsidies for the nuclear industry have been about 25 times more than for the wind industry. Here’s more:
The score (in 2007 dollars):
- Reactor subsidies, 1950-1990: $154 billion, or $3.75 billion a year.
- Wind power subsidies, 1983-2007: $3.75 billion 25-year total.
Over the past 25 years, the entire federal subsidy for wind power has been no greater than the subsidy bestowed on nukes each year from the fifties through the eighties.
My wind power subsidy estimate uses the WSJ’s $23.37 per megawatt-hour figure, which came from the new Energy Information Administration report, “ Federal Financial Interventions and Subsidies in Energy Markets 2007” (PDF). Most of that is the $19.00/MWh production tax credit; the remainder is primarily for research and development.I applied this $23.37 figure to all U.S. wind power production from 1983, the first year for which the feds tabulated wind energy output (a mere 2,800 megawatt-hours), through last year’s 31.9 million MWh. The 25-year total of $3.75 billion is derived in this simple spreadsheet (XLS).
For reactors, I looked up my 1992 report for Greenpeace, “ Fiscal Fission: The Economic Failure of Nuclear Power” (PDF). In this “Report on the Historical Costs of Nuclear Power in the United States,” Cora Roelofs and I compiled capital, operating, and subsidy costs for the entire U.S. nuclear power industry on an annual basis from 1968, when the first commercial-size reactors entered service, to 1990. We also reached back to 1950 to pick up costs for R&D during the industry’s protracted pre-commercial incubation.The total 1950-1990 subsidy cost came to $97.0 billion in 1990 dollars, which equates to $153.8 billion in 2007 dollars. About half of that was for R&D. The remainder, summarized in the same spreadsheet and fully dissected in my Greenpeace report, was for federal regulation, shortfalls in enrichment and waste funds shunted to taxpayers, and tax breaks that allowed utilities to pay taxes later with less-valuable money (this latter category alone was worth $41.5 billion).
The total nuclear-industry subsidy of nearly $154 billion apportioned over the 41-year period comes to $3.75 billion a year, coincidentally matching the entire 25-year subsidy for wind power.
This comparison is far from comprehensive. On the nuclear side, I excluded vast categories of government support for nuclear power, most notably the Price-Anderson Act, which since 1957 has shielded utilities from full liability for potential costs to society from reactor accidents. I also omitted a dozen other categories of public subsidy ranging from the ideological support that crowned nuclear power an official technology, in Prof. Steven Mark Cohn’s memorable phrase, and smoothed the path to capital, to the more concrete support the industry obtained from U.S. Bureau of Mines uranium exploration programs.
On the wind side, my procedure of calculating annual subsidies from the current per-MWh subsidy doubtless understates early support for wind power, when R&D per MWh would have been greater. Still, I think the bottom-line finding of nuclear power’s 25-to-1 subsidy advantage over wind power is about right.
Another quote from a tremendous Worldwatch report on nuclear power published this April:
“In the United States, even though nuclear and wind technologies produced a comparable amount of energy during their first 15 years (2.6 billion kWh for nuclear versus 1.9 billion kWh for wind), the subsidy to nuclear outweighed that to wind by a factor of over 40 ($39.4 billion versus $900 million).”
<<— Page 2: More on What Subsidies Are
—>> Page 4: Info on Wind Subsidies & Summary
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