Memo To EPA Chief Pruitt: Let’s End Subsidies For Fossil Fuels, Not Renewables

By Elliott Negin, Contributor, Senior Writer, Union of Concerned Scientists
October 24, 2017

Gov­ern­ment hand­outs for coal, oil and gas dwarf those for wind and solar.

Envi­ron­men­tal Pro­tec­tion Agency Admin­is­tra­tor Scott Pruitt recently pro­posed elim­i­nat­ing fed­eral tax cred­its for wind and solar power, argu­ing that they should “stand on their own and com­pete against coal and nat­ural gas and other sources” as opposed to “being propped up by tax incen­tives and other types of credits.…”

Stand on their own?

Pruitt surely must be aware that fos­sil fuels have been feast­ing at the gov­ern­ment trough for at least 100 years. Renew­ables, by com­par­i­son, have received sup­port only since the mid-​​1990s and, until recently, have had to sub­sist on scraps.

Per­haps a review of the facts can set Admin­is­tra­tor Pruitt straight. There’s a strong case to be made that Con­gress should ter­mi­nate sub­si­dies for fos­sil fuels and extend them for renew­ables, not the other way around.

A Cen­tury (or Two) of Subsidies

To pro­mote domes­tic energy pro­duc­tion, the fed­eral gov­ern­ment has been serv­ing the oil and gas indus­try a smor­gas­bord of sub­si­dies since the early days of the 20th Cen­tury. Com­pa­nies can deduct the cost of drilling wells, for exam­ple, as well as the cost of explor­ing for and devel­op­ing oil shale deposits. They even get a domes­tic man­u­fac­tur­ing deduc­tion, which is intended to keep U.S. indus­tries from mov­ing abroad, even though — by the very nature of their busi­ness — they can’t move over­seas. All told, from 1918 through 2009, the industry’s tax breaks and other sub­si­dies amounted to an aver­age of $4.86 bil­lion annu­ally (in 2010 dol­lars), accord­ing to a 2011 study by DBL Investors, a ven­ture cap­i­tal firm. Account­ing for infla­tion, that would be $5.53 bil­lion a year today.

The DBL study didn’t include coal due to the lack of data for sub­si­dies going back to the early 1800s, but the fed­eral gov­ern­ment has lav­ished con­sid­er­ably more on the coal indus­try than on renew­ables. In 2008 alone, coal received between $3.2 bil­lion and $5.4 bil­lion in sub­si­dies, accord­ing to a 2011 Har­vard Med­ical School study in the Annals of the New York Acad­emy of Sciences.

Mean­while, wind and other renew­able energy tech­nolo­gies, DBL found, aver­aged only $370 mil­lion a year in sub­si­dies between 1994 and 2009, the equiv­a­lent of $421 mil­lion a year today. The 2009 eco­nomic stim­u­lus pack­age did pro­vide $21 bil­lion for renew­ables, but that sup­port barely began to level the play­ing field that has tilted in favor of oil and gas for 100 years and coal for more than 200.

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