Clean Power

Published on January 28th, 2014 | by The Alliance for Solar Choice (TASC)


Monopoly Utilities Neglect To Mention Billions In Fossil Fuel Subsidies

January 28th, 2014 by  

Last weekend, the New York Times took a look at changing GOP perspectives on solar – particularly rooftop solar – as more conservatives embrace renewables. The article highlights rooftop solar-supporting conservatives like Barry Goldwater Jr. and Tom Morrissey from Arizona, and Debbie Dooley from Georgia.  The piece describes a shift in GOP attitudes toward rooftop solar, which represents a competitive threat to monopoly utilities:

“One would not expect to see Barry Goldwater Jr., the very picture of modern conservatism and son of the 1964 Republican nominee for president, arguing passionately on behalf of solar energy customers. But there he was last fall, very publicly opposing a push by Arizona’s biggest utility to charge as much as $100 a month to people who put solar panels on their roofs.”

Debbie Dooley of the Green Tea Party Movement emphasizes a point that should be integral to all energy discussions:  “The [monopoly utilities] neglect to mention billions of dollars that the fossil-fuel industries have received.”

Yes – conveniently for utilities, they never talk about the tens of billions of dollars in permanent subsidies they’ve received over the past century.  These fossil fuel subsidies are entrenched in the tax code.  For example, since the US began subsidizing energy, the average annual subsidy has been $4.86 billion for oil and gas and just $370 million for all renewable technologies (Source: “What Would Jefferson Do”).

One good example of these subsidies (there are many): Percentage depletion allows fossil fuel companies to take a substantial tax deduction (15% of gross revenue for oil and gas; 10% for coal) for using up reserves of natural resources. This costs the American taxpayer about $1 billion per year.

This graphic below from the Environmental Law Institute summarizes the gap between fossil subsidies and solar subsidies well.

If utilities want to look at energy subsidies, let’s start with the oldest ones first.  There are plenty of decades- or centuries-old fossil and nuclear subsidies that should be reconsidered.


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About the Author

advocates for maintaining successful distributed solar energy policies, such as retail net metering, throughout the United States. Retail net metering (NEM) provides fair credit to residents, businesses, churches, schools, and other public agencies when their solar systems export excess energy to the grid. The Alliance for Solar Choice (TASC) was formed on the belief that anyone should have the option to switch from utility power to distributed solar power, and realize the financial benefits therein. The rooftop solar market has been largely driven by Americans’ desire to assert control over their electric bills, a trend that should be encouraged.

  • Doug

    If there are to be government subsidies, these funds should go towards investment in new technology, new national capability, pollution reduction, efficiency improvements, safety and infrastructure reliability and robustness. Subsidizing fossil fuels doesn’t meet these criterion

  • Will E

    first of all, solar and wind can do without subsidies.
    solar has become so cheap and easy to install. start making lots of money with your solar panels. sell stock buy solar for more revenue for years to come.
    renewables is a money maker for you. I pay no more energy bills saves me 3000 euros a year every year. next year EV and solar on the garage, no more gas bills, again save 3000 euros.
    fossil free, clean cheap reliable saves me a whooole lot of dollars.
    how much is that in dollars?

  • Sasha

    The graphic is perverted, as it implies that renewables produce energy on the same scale as Fossil Fuels, when in reality they (wind and solar, not wood based bio fuels, hydro, geothermal) produce around 7% of our electricty, or 3.3% of our annual energy, vs 64% from fossil fuels.

    Thus, Fossil Fuel subsidies are around $1.09 billion per percent of American energy consumption, vs $3.69 per percent for solar and wind. This is massively more for wind and solar, thus disproving the main argument in the article.

    Source: EIA 2013 Annual Energy Outlook

    • Bob_Wallace

      After all these many years should fossil fuels not be standing on their own? Why are they getting a single penny of support? Why are coal and oil not paying their external costs? Why is oil not paying for our three oil wars?

      Wind and solar are emerging technologies. Our subsidy programs have been wildly successful bringing the cost of wind power down from 38 cents per kWh to around 5 cents. Approaching an 8x price drop. The cost of solar panels has fallen from well over $100/W to under $1/W, a 100x price drop.
      The money we are spending on renewables is paying off spectacularly.

      If you want to worry about tax dollars, worry about the money we are wasting on coal and oil. Worry about what we are doing to our country and the world by continuing to use fossil fuels. That is leading us to debts that may be impossible to pay.

      • Doug Cutler

        What he just said.

    • Don Osborn

      Sasha, you seem to miss the whole point of subsidies. They are meant to help new technologies grow and become competitive. As such, the renewable subsidies are working just like they should to the betterment of us all.

    • Peter Gray

      Wow, I’ve seen some wacky coal-troll comments around here, but this is in the top (bottom, really) ranks.

      _Nothing_ in the article or the graphic implied “that renewables [already] produce energy on the same scale as Fossil Fuels.” As Bob aptly pointed out, subsidies have been essential for accelerating the rapid cost reductions of solar and wind, while subsidies for coal and oil, though much larger, have mainly led to increased pollution and damage, along with delayed adoption of renewables. And not even cheaper energy once we account for the taxes and debt that pay for the subsidies.

      In an ideal world, I see no reason to subsidize _any_ energy resource, including renewables, unless some positive externality from their use can be identified. Instead, all of them should be taxed according to their negative externalities. But we live in a world where everyone loves subsidies and hates taxes, no matter how well justified the tax. So at least a timid step toward balancing the subsidy scale is a step in the right direction, even if it’s not a very efficient step.

      If there were no subsidies for any type of energy, renewables might have progressed faster than they have so far, and certainly we’d be using less energy in total. Even a small carbon tax would have made the transition even faster, along with reducing other taxes or deficit spending, or both.

      And is this supposed to mean something?:
      “..$1.09 billion per percent of American energy consumption, vs $3.69 per percent…”

  • Steeple

    Yeah, we’ve been through this exercise before. Total fossil fuels subsidies = approx. 2% of the prices of the fuels. Yawn. Please get rid of them so organizations like the whatever Alliance needs something else to whine about.

    Get back in the lab and keep working on solar panels that are competitive at $4 natural gas, and you won’t be able to make enough of them.

    • Shiggity

      Natural gas and solar are not enemies. Nuclear and coal are the ones getting smacked down.

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