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.