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Talking Points on Energy Subsidies

By Alex Epstein

Unreliable energy sources receive dozens of times greater subsidies than fossil fuels, in addition to other unfair advantages. Without these, they would hardly be used at all.

Q: Don't fossil fuels get more subsidies than solar and wind?

A: Not only do solar and wind get dozens of times more subsidies than fossil fuels, they get many other unfair advantages--such as no price penalty for unreliability--without which they would barely be used at all.

  1. The proper way to measure energy subsidies is: How much taxpayer money does the government pay per unit of energy? Every per-unit analysis using data from the US Energy Information Administration is clear: solar and wind get dozens of times more subsidies than fossil fuels.1
  2. Claims that fossil fuels get more subsidies than solar/wind use "total subsidies," not per-unit subsidies. By that logic Walmart is more expensive than Nordstrom because Walmart takes in more total $. (No store, including Nordstrom, charges the crazy markup that solar/wind get.)
  3. A comprehensive analysis of federal subsidies per unit of electricity generated from 2010-2019 found that solar got 211 times more subsidies than natural gas and wind got 48 times more subsidies than natural gas.2
  4. In addition to exorbitant subsidies solar and wind get numerous other unfair advantages, including:

    • Mandates that force us to pay for solar panels, wind turbines, and long-distance transmission lines, regardless of cost3
    • No price penalty for solar/wind's costly unreliability
  5. Claims that fossil fuels get trillions in "negative externalities," mostly from climate impacts, are bogus because 1) climate deaths are at record lows--as are climate damages as a %age of wealth; 2) they ignore countless trillions in positive externalities from fossil fuels.4
  6. One huge category of positive externality from fossil fuels is the amount of time that uniquely low-cost, reliable, versatile, scalable fossil fuel "machine labor" frees up from tasks like farming. Freed-up time underlies all innovation, from the Internet to Covid-19 vaccines.

References


  1. “Despite renewable energy receiving almost half the federal subsidies, EIA reported that fossil energy in the form of coal, oil, natural gas and natural gas plant liquids made up 78.1 percent of primary energy production in FY 2016.

    In FY 2016, certain tax provisions related to oil and natural gas yielded positive revenue flow for the government, resulting in a negative net subsidy of $773 million for oil and natural gas, based on estimates from the U.S. Department of Treasury.”
    Institute for Energy Research - EIA Report: Renewable Energy Still Dominates Energy Subsidies
    Terry Dinan - U.S. House of Representatives testimony, 2017 (p. 4)

  2. Texas Public Policy Foundation - Federal Energy Subsidies and Support from 2010 to 2019 (p.13)

  3. As an example, the implementation of Renewable Portfolio Standards forces grid operators to use increasing shares of renewable sources, mostly solar and wind by law.
    U.S. Energy Information Administration - Renewable energy explained Portfolio standards

  4. Talking Points on the So-Called Climate Crisis