In case you’re ever wondering, this is an example of your tax dollars at work. Thirty years ago solar and wind generation had to be heavily subsidized with government grants to make them viable in the energy market. Now the technology of both has advanced to the point that it’s undercutting all of the other forms of electricity generation, without subsidization.
Government subsidies work. They’re effective for getting new technologies off the ground.
Now whether or not any of that has been effective I couldn’t tell you, especially considering those communities aren’t historically fond of democratic administrations.
As we’ll hear today, the United States subsidizes the fossil fuel industry with taxpayer dollars. It’s not just the US: according to the International Energy Agency, fossil fuel handouts hit a global high of $1 trillion in 2022 – the same year Big Oil pulled in a record $4 trillion of income.
In the United States, by some estimates taxpayers pay about $20 billion dollars every year to the fossil fuel industry. What do we get for that? Economists generally agree: not much. To quote conservative economist Gib Metcalf: these subsidies offer “little if any benefit in the form of oil patch jobs, lower prices at the pump, or increased energy security for the country.” The cash subsidy is both big and wrong.
It should be noted that your link only explores federal subsidies, while Whitehouse notes the bulk of subsidization that happen at the state and local level. Texas, for instance, invests enormously in public works that benefit fossil fuel producers while offering the administrative offices generous grants and tax forbearances to operate within the state.
Because energy consumption underpins the bulk of our commercial activities, there is a real net-benefit to keeping raw fuel and electricity prices artificially low. Market rate energy would constrict capital construction and real estate development, reduce employment rates, and increase inflation - generally speaking, it would cut into long term economic growth. The OPEC embargo of the 70s demonstrated as much.
At the same time, fossil fuel consumption yields a host of side-effects - degradation of air and water quality, rising global temperatures leading to more sever weather and sea levels which increase the rate of coastal erosion, wholesale destruction of agricultural land and waterways where spills occur, etc.
So subsidies aren’t bad on their face, but fossil fuel subsidies - particularly at the scale of current energy consumption - carry far too many negative externalities to be considered good long term policy.
Unfortunately, the political benefits of fossil fuel subsidy continue to outweigh the social consequences, leading to a political class that is financially invested in continuing subsidies that have long since transformed into a net negative for domestic growth.
The US has been subsidizing energy infrastructure transitions for over a hundred years. When coal power, nuclear power, hydro etc were new initiatives they all had a big helping hand from tax dollars.
Yes they are still heavily subsidized, but according to Lazard’s Levelized Cost of Energy Analysis utility-scale solar and wind are lower cost ($/MWh) than most other forms of electricity generation, even when unsubsidized. That has been true since at least the 2016 version of the report (check out the chart on page 2). In the 2023 version this is still true.
Wind power in particular is just ridiculously cheap to install and operate, which is why there have been so many new installations over the past decade. Spending money on any other new power generators just looks financially irresponsible at this point. I think this is part of why new nuclear projects keep dying - they get more expensive while wind and solar get cheaper.
Unfortunately, in comparison rooftop residential solar looks like a bad investment.
So yes, wind and solar are still subsidized because the government wants to encourage their use, but they don’t have to be subsidized to be competitive in the energy market.
In case you’re ever wondering, this is an example of your tax dollars at work. Thirty years ago solar and wind generation had to be heavily subsidized with government grants to make them viable in the energy market. Now the technology of both has advanced to the point that it’s undercutting all of the other forms of electricity generation, without subsidization.
Government subsidies work. They’re effective for getting new technologies off the ground.
They are great. As long as they don’t end up like corn.
Or oil and coal, propping up bad energy sources while the clean ones have to often fend for themselves and compete against the subsidies.
Or oil and corn and meat and dairy.
The four elements of power.
They do get subsidized pretty well, which is a good thing in my book.
https://www.reuters.com/business/energy/us-doubles-renewable-subsidies-156-billion-last-seven-years-eia-2023-08-02/#:~:text=Fuel-,US doubles renewable subsidies to %2415.6,last seven years%2C EIA says&text=Aug 2 (Reuters) - U.S.,report released on Tuesday showed.
Not as much as it needs to to compete fairly with the $7 trillion for fossil fuels. The fact they still can compete is great though. It shows how dead fossil fuels should be even if it was just left up to capitalistic mechanisms. Sadly the government interferes in the market in a bad way often for this.
Solar PV tortillas taste awful and hurt my teeth.
So now the coal and oil power plants require government subsidies.
https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/23/fact-sheet-biden-administration-outlines-key-resources-to-invest-in-coal-and-power-plant-community-economic-revitalization/
Now whether or not any of that has been effective I couldn’t tell you, especially considering those communities aren’t historically fond of democratic administrations.
Everything I find shows them as still being subsidized and receiving the lions share of energy subsidies, which is fine in my book.
https://en.m.wikipedia.org/wiki/Energy_subsidies_in_the_United_States#:~:text=In the United States%2C the,total of US $34 billion.
According to Senator Sheldon Whitehouse, the bulk of our state and federal subsidies are tilted towards fossil fuels.
It should be noted that your link only explores federal subsidies, while Whitehouse notes the bulk of subsidization that happen at the state and local level. Texas, for instance, invests enormously in public works that benefit fossil fuel producers while offering the administrative offices generous grants and tax forbearances to operate within the state.
Because energy consumption underpins the bulk of our commercial activities, there is a real net-benefit to keeping raw fuel and electricity prices artificially low. Market rate energy would constrict capital construction and real estate development, reduce employment rates, and increase inflation - generally speaking, it would cut into long term economic growth. The OPEC embargo of the 70s demonstrated as much.
At the same time, fossil fuel consumption yields a host of side-effects - degradation of air and water quality, rising global temperatures leading to more sever weather and sea levels which increase the rate of coastal erosion, wholesale destruction of agricultural land and waterways where spills occur, etc.
So subsidies aren’t bad on their face, but fossil fuel subsidies - particularly at the scale of current energy consumption - carry far too many negative externalities to be considered good long term policy.
Unfortunately, the political benefits of fossil fuel subsidy continue to outweigh the social consequences, leading to a political class that is financially invested in continuing subsidies that have long since transformed into a net negative for domestic growth.
Excellent distinction. Ty for the info
The US has been subsidizing energy infrastructure transitions for over a hundred years. When coal power, nuclear power, hydro etc were new initiatives they all had a big helping hand from tax dollars.
Yes they are still heavily subsidized, but according to Lazard’s Levelized Cost of Energy Analysis utility-scale solar and wind are lower cost ($/MWh) than most other forms of electricity generation, even when unsubsidized. That has been true since at least the 2016 version of the report (check out the chart on page 2). In the 2023 version this is still true.
Wind power in particular is just ridiculously cheap to install and operate, which is why there have been so many new installations over the past decade. Spending money on any other new power generators just looks financially irresponsible at this point. I think this is part of why new nuclear projects keep dying - they get more expensive while wind and solar get cheaper.
Unfortunately, in comparison rooftop residential solar looks like a bad investment.
So yes, wind and solar are still subsidized because the government wants to encourage their use, but they don’t have to be subsidized to be competitive in the energy market.
Good thing we still subsidize petroleum
Good for the oil companies and legislators they own, anyway