Subsidies To New Energy Sources Are At Lowest Point In U.S. History

September 23, 2011

SAN FRANCISCO, CA (Sep­tem­ber 23, 2011)

America’s sup­port for energy inno­va­tion has helped drive U.S. growth for more than 200 years, yet gov­ern­ment sup­port for new energy sources is much lower today than it has been at any other point in U.S. his­tory accord­ing to a new report ana­lyz­ing U.S. energy incentives.

Every great expan­sion of the U.S. econ­omy can be linked with the dis­cov­ery of a new energy source. In every sin­gle case, the gov­ern­ment, often at both the fed­eral and state lev­els, heav­ily sub­si­dized that new energy source accord­ing to the report, “What Would Jef­fer­son Do? The His­tor­i­cal Role of Fed­eral Sub­si­dies in Shap­ing America’s Energy Future,” authored by Nancy Pfund, Man­ag­ing Part­ner, DBL Part­ners and Ben Healey, a Yale Uni­ver­sity grad­u­ate student.

All new energy indus­tries – tim­ber, coal, oil and gas, nuclear – have received sub­stan­tial gov­ern­ment sup­port at a piv­otal time in their early growth, cre­at­ing mil­lions of jobs and sig­nif­i­cant eco­nomic growth,” said Nancy Pfund. “Sub­si­dies for these ‘tra­di­tional’ energy sources were many, many times what we are spend­ing today on renewables.”

Dur­ing the early years of what would become the U.S. oil and gas indus­tries, fed­eral sub­si­dies for pro­duc­ers aver­aged half a per­cent of the fed­eral bud­get. By con­trast, the cur­rent sup­port for renew­ables is barely a fifth that size, just one tenth of one per­cent of fed­eral spending.

Among the report’s key findings:

• Energy indus­tries have enjoyed a cen­tury of fed­eral sup­port. From 1918–2009, the oil and gas indus­try received $446.96 bil­lion (adjusted for infla­tion) in cumu­la­tive energy sub­si­dies. Renew­able energy sources received $5.93 bil­lion (adjusted for infla­tion) for a much shorter period from 1994–2009.

• Aver­age annual sup­port for the oil and gas indus­try has been $4.86 bil­lion (1918–2009), com­pared to $3.50 bil­lion for nuclear (1947–1999) and $0.37 bil­lion (1994–2009) for renew­able energy.

• There is a strik­ing diver­gence in early fed­eral incen­tives. For exam­ple, fed­eral sup­port for the nuclear indus­try over­whelms other sub­si­dies as a per­cent­age of fed­eral bud­get, but equally strik­ing is the sup­port for oil and gas which was at least 25% higher than renew­ables, and in the most extreme years 10x as great.

The take away from this his­tory les­son is that gov­ern­ment sup­port has been and should con­tinue to be an essen­tial com­po­nent in the growth of emerg­ing energy sources, enabling U.S. tech­nol­ogy inno­va­tion, job cre­ation and eco­nomic expan­sion.” said Pfund.


Edi­tors note: The report is co-​​authored by Nancy Pfund, Man­ag­ing Part­ner, DBL Part­ners, a dou­ble bot­tom line ven­ture cap­i­tal firm based in San Fran­cisco, and Ben Healey, a grad­u­ate stu­dent at Yale Uni­ver­sity School of Man­age­ment and School of Forestry and Envi­ron­men­tal Stud­ies, and for­mer Staff Direc­tor to the Com­mit­tee on Envi­ron­ment and Nat­ural Resources in the Mass­a­chu­setts legislature.