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.