Tremendous progress has been made in the development of renewable energy in recent years. Wind, solar, biomass and geothermal energy, as well as biofuels, are providing an ever increasing share of the energy consumed in this county. Moreover, the cost of producing energy from renewable sources has come down rapidly. Yet it remains an inescapable fact that renewable energy is highly dependent on public subsidies, programs and policies (such as tax credits, cash grants, loan guarantees and mandatory renewable energy purchase requirements). Opponents of renewable energy are exceptionally fond of pointing this out and noting that the renewable energy industry would be soundly crushed by competition from the traditional fossil fuel-based energy industry were such public support to be withdrawn.
Recently Senator Bernie Sanders (I-Vt.) and Representative Keith Ellison (D-Minn.) pointed the finger in the opposite direction by introducing a bill (S. 3080) that would end what they believe to be subsidies to the oil, coal and natural gas industries. To insure that no one will miss the point of the bill, they subtly named it the “End Polluter Welfare Act.” At the time they introduced the bill, they also provided a list of twenty-two items that they believe constitute public subsidies to the oil, coal and natural gas industries. These include the following:
- Royalty relief provided by the Department of the Interior, including for deep gas and deep water production
- Cap on economic damages for offshore oil spill (currently $75 million) and for tar sands pipeline operators (currently $350 million)
- Investment tax credit for advanced oil recovery investments
- Tax credit for production from marginal and inefficient wells
- Deduction for tertiary injectant
- Manufacturing deduction
- Accelerated deductions for oil and gas corporations
- Percentage depletion
- Passive loss exemption
- Refinery upgrade deduction
- Intangible drilling oil and gas deduction
- Marginal wells production credit
- Oil and gas arbitrage bonds exemption
- Alternative fuel credit for natural gas
- Dual taxpayer deduction which allows oil and gas companies that operate overseas to classify royalty payments to foreign governments as taxes, thereby reducing their U.S. taxes because foreign taxes, unlike royalty payments
The sponsors of the End Polluter Welfare Act estimate that the total of all fossil fuel subsidies is $113.355 billion over a ten year period. Of that amount, approximately $101.293 billion goes to oil and gas.
While publicity over the bill may help balance the view that only the renewable energy industry receives public subsidies, that in and of itself is not enough to insure that the renewable energy sector will continue to grow. Congress will simply have to allocate more dollars to that sector if we want it to develop.