The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

U.S. Support for Renewables is Minuscule — and Erratic

It's time to ponder a rational comparison of historical U.S. energy incentives. In a thoughtful analysis called "What Would Jefferson Do?" authors Nancy Pfund and Ben Healey of DBL Investors offer some revealing insight to inform the debate.

There is no free market in energy, and calls to action for renewables “to stand up to competition without any government support” would be better informed by a look at historical efforts to promote energy transitions in the U.S.

Coal, oil, gas and nuclear energy did not emerge as fully matured, low-cost energy sources. Instead, they were the beneficiaries of decades of permanent and significant federal government incentives and supportive regulation. As part of a larger push to create jobs, support expansion, and fuel economic growth, the U.S. government has used a variety of financial and regulatory incentives to support energy innovation for over 200 years. Here are some of my favorites:

  • In 1789, to promote the nascent domestic coal mining industry, the federal government enacted a tariff on imported coal, insuring that domestically produced coal would have a major cost advantage. The goal? To incentivize development of this strategic and emerging energy resource. The result? Higher short term prices for consumers.
  • Throughout the 19th century, timber and coal interests benefitted from below market land grants, state sponsored geological surveys identifying resources, federal support to build out railway and waterway transportation systems to enable the extraction of these energy resources as well as a host of policies to spur growth.
  • In 1950, Congress passed a subsidy that allowed owners of coal mining rights to reclassify income traditionally subject to income tax as royalty payment, for which a lower capital gains tax rate is paid. This special tax treatment is still available to members of the coal industry today and totaled well over $1.3 billion in forgone tax revenue between 2000 and 2009.
  • And the nuclear industry got a huge boost when Congress passed the Price-Anderson Act in 1957, which provided federal indemnification of utilities in the event of nuclear accidents. At the time, the Edison Electric Institute testified that without such immunization from the risk, “no utility company … will build or operate a reactor.”

So how do those incentives compare to current investments in renewables?

The level of support in the early days of the coal, oil, gas and nuclear industries, as a percentage of the overall federal budget, dwarfs what is being spent to promote renewables. The report concludes that nuclear subsidies accounted for more than one percent of the federal budget over the industry’s first 15 years (as a percentage of inflation-adjusted federal spending). Oil and gas subsidies comprised 0.5 percent of the federal budget from 1918-1933. Meanwhile, support for renewables constituted only 0.1 percent of the federal budget since 1994. As you can see on the chart below, in inflation adjusted dollars, nuclear spending averaged $3.3 billion over the first 15 years of the subsidy life, oil and gas averaged $1.8 and renewables clocked in at less than $0.4 billion.

What’s even more surprising is that 50 percent of the Department of Energy’s research and development spending from 1948-2010 supported the nuclear industry. During that same period, 25 percent was spent on fossil fuels, 12 percent on renewables and nine percent on energy efficiency.

Equally important is the fact that support for oil, gas, coal and nuclear has made its way in the permanent tax code, whereas tax incentives for renewables have traditionally been short term and renewed or not renewed on a sporadic basis. That causes a boom/bust market where investors fear making long term bets.

So what’s the take-away?

Energy policy is intricately related to government strategy for economic development. In the 1800s, the U.S. favored expansion and development of coal resources. In the 1900s, it promoted development of oil and gas resources in the first half of the century and hydro-electrical and nuclear energy sources in the second half.

If we want to insure leadership in the transition to the next predominant energy source — a transition underway in every major economy in the world — we need to use rational policy and sound regulation to steer us in that direction.

Untitled Document

Get All the Renewable Energy World News Delivered to Your Inbox - FREE!

Subscribe to Renewable Energy World Magazine and our award-winning e-Newsletter to stay up to date on current news and industry trends.

 Subscribe Now



DOE Releases Final Programmatic Environmental Impact Statement for Hawaii

Jennifer Delony DOE released a final programmatic environmental impact statement for Hawaii to provide federal, state and county gove...

The 800 Ways Taxpayer Money Supports Fossil Fuel Industries

Reed Landberg, Bloomberg As world leaders converge on New York for a United Nations gathering that’s expected to have a strong emphasis on cli...

Makers of Fuel From Plants Feel Forsaken in Obama’s Climate Push

Mario Parker, Bloomberg Producers of motor fuels from plant waste say they have been left behind in President Barack Obama’s push to fight cl...
clean energy

Report: Vermont Clean Energy Sector Jobs Increased 9.8 Percent Since 2013

Jennifer Delony Vermont saw a 9.8 percent increase in clean energy sector jobs since 2013, and jobs in the sector are expected to gro...


US Solar Hosts Sierra Club Solar Meeting

This past Monday, US Solar welcomed a new group to its solar training classroom – The S...

US Solar Invited to Speak at Intersolar North America

Intersolar, the largest solar conference and expo in North America is right around the ...

US Solar - Green Planet Festival Highlights Solar Energy and Solar Training This Weekend

US Solar Institute (USSI) is excited to announce that they are the educational sponsor ...

Yaskawa – Solectria Solar Provides Inverters for One of the Largest Professional Sport Stadium PV Systems in North America

Yaskawa - Solectria Solar, a leading U.S. PV inverter manufacturer, announced today tha...


Solar Decathlon 2015 Opens to the Public in California

Today, Oct. 8, the biennial Solar Decathlon opened up to the public at Orange County Great Park in Irvine, ...

ENER-G CHP technology selected for major London housing scheme

ENER-G has been selected to supply combined heat and power (CHP) technology for phase two of the Leopold Estate housi...


Necessity is the mother of innovation. Our planet is going through major changes in climate. This of course will affe...

Georgia Legislature Approves PPA’s, Florida Hoping to Follow

Ah, the sunny south, the land of peaches, oranges and solar potential. I’m talking about Georgia and Florida he...


Cathy is responsible for crafting and articulating Applied’s energy policy strategy for energy efficiency solutions, energy generation and energy storage, all of which Applied is accelerating with its nanomanufacturing expertise. She also leads Ap...


Volume 18, Issue 4


To register for our free
e-Newsletters, subscribe today:


Tweet the Editors! @jennrunyon



Successfully Integrating Solar: A Proactive Approach

•      What does the increasing solar penetrati...

Canadian Solar Inverters Webinar

Canadian Solar is proud to be hosting two free webinars in October! The ...

Doing Business in Europe – in partnership with GWEC, the Global Win...

There is now 128.8 GW of installed wind energy capacity in the EU (appro...


The Grab Bag Rides Again

Pregame When I was sports editor for the college newspaper, I wrote a co...

How To Speak, How To Listen

As sales professionals, effective communication is paramount to our succ...

Get In The Habit

We all develop habits throughout our lives. Sometimes they’re bene...


Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now