In Energy Sector, Renewables Get Less Federal Support

A report from the Government Accountability Office (GAO) comparing federal electricity subsidies by fuel type shows that renewables such as wind still get only a small share of the overall subsidies awarded to the energy sector.

The GAO report looks specifically at research and development (R&D) and tax expenditures for fossil fuels, nuclear, and renewable energy from fiscal year (FY) 2002 through FY 2007. The report’s cover letter — addressed to Senators Thomas Carper (D-Del.) and Lamar Alexander (R-Tenn.), who requested the analysis — notes the importance of federal subsidies in light of energy’s crucial role within society.

“Because of electricity’s importance to producers, consumers, and businesses, the federal government has undertaken a wide range of programs to develop the electricity sector, which includes fuel suppliers, electric utilities, and others in the electricity industry,” the letter states.

The report shows total R&D expenditures from FY 2002 to FY 2007 to be $11.5 billion, which was distributed among nuclear ($6.2 billion), fossil fuel ($3.1 billion) and renewable energy ($1.4 billion). Total tax expenditures for the energy sector from FY 2002 to FY 2007 were $18.2 billion, with fossil fuel receiving $13.7 billion and renewable energy receiving $2.8 billion.

“These programs have sought to, among other things, develop the nation’s electrical infrastructure, influence the types of fuels used to produce electricity, increase the use of renewable energy, and limit the harmful effects of electricity production,” the report states.

“This report shows that technologies that have existed for 50 years or more continue to receive significantly more federal support than recent renewable technologies that are better suited to solving the nation’s electricity supply, energy security, and environmental challenges,” said AWEA Manager of Policy Analysis Elizabeth Salerno.

The report does not include the value of subsidies that were received by generation prior to FY 2002 or subsidies provided beyond R&D and tax measures, such as limited liability insurance or loan guarantee and grant programs. A discussion of federal electricity subsidies other than R&D and tax expenditures is provided in the 67-page report.

“It’s clear that the subsidies and incentives provided by the federal government vary widely depending on the energy technology, with conventional fossil energy continuing to receive the lion’s share of federal support,” said Charlie Niebling, General Manager of New England Wood Pellet. “For example, biomass used in thermal energy such as pellet fuels receives no subsidy whatsoever, while biomass used in ethanol production and electric generation receives significant federal support. A comprehensive, technology-neutral energy policy must correct these inequities.”

A portion of this article first appeared in Wind Energy Weekly, and was republished with permission from the American Wind Energy Association.

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Carl is Editor & Publications Manager at the American Wind Energy Association, where has worked since 2006. At AWEA he oversees AWEA's online and print publications including the Wind Energy Weekly, Windpower Update, and other products. He has worked as a journalist in the energy industry as a staff writer for Public Utilities Fortnightly magazine and in the association sector as senior editor at Association Management magazine. He also has covered the home-building industry, where his areas of greatest interest were sustainable development and "smart growth," and has written articles for numerous other publications as a freelance writer. Carl received his B.A. from James Madison University and spent some time in New Orleans teaching as well as working with homeless youth.

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