Environmentalists have long complained about oil and gas industry subsidies. But we don’t hear from them regarding the subsidies paid out for politically favored renewable energy programs, even though the supposedly green sources are dining sumptuously on taxpayers’ dollars. In fact, renewables are more heavily subsidized than the fossil fuels, and it would be difficult if not impossible for them to exist without the support.
From 2016 to 2022, “energy-specific subsidies and support” totaled $183.3 billion, according to a U.S. Energy Information Administration report. While “wind and solar power account for about 21% of domestic electricity production,” they nevertheless took in “a staggering $83.8 billion in subsidies, by far the largest share compared to any other category,” says Fox News.
The EIA says that over that period, “nearly half (46%) of federal energy subsidies were associated with renewable energy,” with “federal support for renewable energy of all types” more than doubling, from $7.4 billion in fiscal 2016 to $15.6 billion in fiscal 2022.
Meanwhile, “natural gas and petroleum-related tax expenditures” – which are not direct government spending nor tax loopholes – were $2.1 billion in fiscal 2022.
“For years Democrats have claimed technologies like solar energy are cheaper than coal, oil, natural gas, and nuclear. This report makes clear that solar is largely dependent on heavy subsidies with taxpayer dollars,” Senate Energy and Natural Resources Committee Ranking Member John Barrasso, R-Wyo., told Fox earlier this week.
In truth, the fossil fuel industry receives no special benefits but simply takes advantage of the breaks all business are eligible for.
“The oil and natural gas industry doesn’t get the guaranteed loans made famous by the Solyndra affair,” former American Petroleum Institute President Jack Gerard once said.
Just like Apple, Starbucks and Amazon, fossil fuel companies can deduct the cost of doing business and asset depreciation. They can also utilize foreign tax credits as well as the breaks Congress created for domestic manufacturing. In instances when oil companies don’t pay the royalties that are usually required to extract oil and gas from public lands, the business incomes derived from these operations are still “taxed at the same levels as any other income,” explains this Forbes contributor.
Because they are the darlings of the ruling class, Washington lavishes dollars on green energy companies, such as Solyndra, the $500 million solar panel wreck. Economist Stephen Moore says that “over the last 30 or so years, the renewable energy industry has received well over $100 billion in federal, state and local handouts.” He wrote that in 2019, before the Democrats’ Inflation Reduction Act began delivering “funding, programs, and incentives to accelerate the transition to a clean energy economy,” and the White House restarted the “Obama-era green energy loan program that funded Solyndra and cost taxpayers billions.”
The sort of direct aid spent on renewable energy is hardly the same as oil and gas companies using the same tax code as every other business to keep their liabilities down. And there’s more to come, much more. The Economist reported earlier this year that there’s up to $800 billion “in clean‐energy handouts now up for grabs over the coming decade,” because of the Inflation Reduction Act. We live in an odd world in which energy sources are “consuming taxes instead of paying them.”
History shows that energy production and consumption have progressed effectively without government meddling. Now we are in a transition that is being mandated by politics, not advanced by markets. As oil analyst Euan Mearns says, it might “go down as one of the greatest acts of economic, environmental and social vandalism in human history.”
— Written by the I&I Editorial Board