OPINION: U.S. subsidies for renewables staggering

WEEKEND READING

Ottawa energy economist Robert Lyman has looked at the amount being spent (taxpayer dollars) by the United States to support renewable energy development, including wind power.

The dollar amounts are simply staggering. Look too at the amount of power generation being achieved, for the taxpayer money spent.

               United States Subsidies for Wind and Solar Electricity Generation

How much do electricity consumers and taxpayers in the United States pay to help companies that produce industrial wind turbines and solar power equipment sell their products to electrical utilities? Some useful information on this subject came to light in March 2015, when the U.S. Energy Information Administration (EIA) published a report entitled Direct Federal Financial Interventions and Subsidies in Fiscal Year 2013.  The report can be read online here:

http://www.eia.gov/analysis/requests/subsidy/pdf/subsidy.pdf

The report was prepared in response to a request from the U.S. House of Representatives. It focuses on both U.S. federal government subsidies to electricity production in general and subsidies to federal electric utilities. It does not include information on the programs of the U.S. states governments, 33 of which now impose Renewable Energy Standards that require electrical utilities to increase energy production from renewable energy sources. The report aims to provide data, not to draw conclusions or discuss policy issues. Most of the data compares the subsidy levels in 2013 to those in 2010, the date of the last EIA report on this subject. All figures are in U.S. dollars.

Here are the highlights.

  • In 2013, subsidies to fuel and technologies used for electricity production totaled $16.1 billion, compared to $11.7 billion in 2010. Subsidies to transmission and distribution totaled $1.2 billion in 2013, compared to $10.9 billion in 2010.
  • Subsidies to renewable energy for all uses totaled $15.0 billion in 2013, compared to $15.6 billion in 2010.
  • Wind and solar energy are the two largest recipients of subsidies.
  • In 2013, wind energy received $5.9 billion, of which $4.3 billion was in the form of direct expenditures (i.e. grants and contributions), $1.6 billion was tax expenditures (e.g. deductions and write-offs), and $49 million was research and development.
  • In 2013, solar energy received $5.3 billion, of which $3.0 billion were direct expenditures, $2.1 billion were tax expenditures, and $284 million were R&D.
  • Electricity-related subsidies increased 38% between 2010 and 2013, from $11.8 billion to $16.1 billion, largely as a result of a $4.2 billion increase in support for solar energy.
  • Wind energy received the largest share of direct federal support in 2013, accounting for 37% of total electricity-related subsidies.
  • Support for Smart Grid and electricity transmission represented the largest portion of electricity-related R&D subsidies. Nearly 39% of 2013 R&D expenditures were devoted to researching the electricity grid’s capability to accommodate larger shares of electricity from intermittent sources.
  • Renewables, excluding biofuels, received 72% of all electricity-related subsidies in 2013, yet accounted for 13% of generation capacity and 4% of actual generation. 

Supporters of renewable energy often compare subsidies to renewable energy to those for nuclear energy and for oil and natural gas.

  • In 2013, U.S. federal subsidies to nuclear energy totaled $1.7 billion, down from $1.9 billion in 2010. Of the 2013 figure, $406 million were spent on R&D and $1.1 billion were tax expenditures.
  • Nuclear energy accounted for 1141 billion kilowatt-hours of electricity generation in 2013, 28% of the U.S. total.
  • In 2013, subsidies to oil and natural gas totaled $2.3 billion (down from $2.7 billion in 2010), of which almost all were tax expenditures.
  • Tax expenditures are largely incentives to invest and often involve the involve the deferral of taxes to later years conditional on reinvestment.

Robert Lyman

Ottawa

August 12, 2015

Comments

Tracy
Reply

Divert from the green energy act and plethora of crimes associated with it: focus elsewhere!
I get a kick out of the Conservative Duffy trial involving hundreds of thousands of dollars. The scandals committed by the Ontario Liberal government and Dalton McGuinty far exceeds the Duffy deal.
What the public is aware of e.g. the gas plant scandal; is the tip of the iceberg of the squandering of BILLIONS of dollars by the Ontario Liberal government. I can’t wait for it to be brought into the courts.

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