Monday, August 30, 2010

Taxpayer subsidies? I got your subsidies right here pal! (And why aren't my free market friends raising hell about this?)

One of the most persistent criticisms of efforts to stimulate clean energy jobs (wind, solar, etc.) is that it requires taxpayer funded government subsidies.

As Russ Harding of the Midland, MI-based Mackinac Center for Public Policy says in
a 2009 column “if the answer is yes (that they require subsidies), the end economic results are more likely negative rather than positive.”

The critics never acknowledge that the status quo is laden with huge subsidies for the coal, nuclear and oil that currently make up the bulk of our fuels.

Now we have some idea how much those subsidies are. And they’re huge.

The Environmental Law Institute has published a report, Estimating U.S. Government Subsidies to Energy Sources, 2002-2008. The findings: Subsidies to fossil fuels “totaled approximately $72 billion over the study period, representing a direct cost to taxpayers.”

Most of the fossil fuel subsidies were permanent alterations to the tax code. The largest, $15 billion, was the Foreign Tax Credit – a direct incentive for U.S. companies to invest in energy production outside the U.S. instead of in homegrown fuels made by Americans.

By comparison, most of the $29 billion in renewable energy subsidies were time-limited – a huge barrier to investors who are understandably unwilling to invest in industries that may get their tax breaks yanked at the whim of the next Congress.

So this raises two key questions:
1) As a country supposedly unified in increasing our energy independence and moving away from dangerous, unhealthy fossil fuels, why are we subsidizing the fuels we don’t want, rather than the ones we do?
2) Why aren’t so-called “free market” proponents like the Mackinac Center raising more – or any – hell about the tax breaks for fossil fuels? (Hint: Some of these organizations have funders with names like Exxon Mobil)

If we’re going to subsidize energy production, let’s subsidize clean, renewable, American-made energy. If we’re going to be purist “free market” proponents, let’s work to eliminate all energy subidies – and it makes sense to start with the biggest ones: Fossil fuels.

Anytime someone says clean American energy shouldn’t have to get subsidies to compete, they need to answer these questions. Every. Single. Time.

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