Category Archives: Policies

Fossil Fuel and Renewable Energy Subsidies

Introduction: Fossil fuels have a rich and diverse history, and their influence on the production of energy in the United States have been immense. Fossil fuels such as coal, oil and gas have helped the United States grow and further develop our energy innovations for the past 200 years. In order for fossil fuels to be economically viable in the beginning of the industries, the federal government provided subsidies to the coal, oil and gas businesses. These subsidies ranged from land grants from the timber and coal industries in the 1800’s, to tax expenditures for oil and gas in the 20th century. However, the burning of these prehistoric fuels for energy have a vast range of negative effects on the environments across the globe. These include the release of air pollutants such as Nitrogen Oxides, Sulfur Dioxide, Volatile Organic Compounds (VOC’s), and Heavy Metals—including the release of greenhouse gases such as Carbon Dioxide, one of the major gases that is currently contributing to climate change. It is becoming increasingly important that we take the transition from fossil fuels to cleaner renewable energies more seriously. The following report will look at how fossil fuels have been subsidized and how these subsidies have helped the industry; as well as renewable energy subsidies, how subsidies have helped renewables grow, and why subsidies are important for economies of scale for cleaner fuels.

What is a subsidy? A subsidy is monetary assistance that is granted by a government to a person or group in support of an enterprise regarded as being in the public interest. Subsidies can be direct such as cash grants, interest-free loans—or indirect—being tax breaks, insurance, low-interest loans, depreciation write-offs, or rent rebates. Providing subsidies for fossil fuels in the 1800’s and 1900’s was truly in the interest of the public. Fossil fuels helped grow our country into what it is today by providing us the fuel necessary for the industrial revolution, and the fuels needed to transport and expand our population all over the continental United States.  When we look at the first 15 years of oil and gas subsidies, these industries received half a percent of the total federal budget in subsidies. Today, renewable energy subsidies make up only about a tenth of a percent of the federal budget (inflation-adjusted). Thus, the federal commitment to the oil and gas industries was five times greater than the federal commitment to renewables during the first 15 years of each subsidy’s life.   Continue reading Fossil Fuel and Renewable Energy Subsidies

Carbon Tax – “The Most Sensible Tax of All”?

Last Wednesday, Independence Day, two authors, Yoram Bauman, an environmental economist and fellow at Sightline Institute in Seattle and Shi-Ling Hsu, a law professor at Florida State University who is the author of “The Case for a Carbon Tax” published an Op-Ed in the New York Times.

We question whether it is the most sensible tax because of our familiarity with James Hansen’s fee-and-dividend approach to reduce carbon emissions. While similar to Mr. Hansen’s concept, a carbon tax may be sensible, but it would be up to We the People to ensure that our citizen voices were heard as it was implemented and assessed in a way that achieved clean, renewable energy and carbon neutrality goals. A tax certainly seems to be a more transparent policy when compared and contrasted to a cap-and-trade model. However, is the fee-and-dividend action in the public interest the least opaque?

The authors highlight the following:

  • The carbon tax in British Columbia is a substitute for other taxes.
    • Takes the place of payroll, business, investment and employee taxes.
  • Preliminary data show greenhouse gases have been reduced 4.5% in the four years since the inception of the tax.
    • This despite increases in population and GDP.
  • Gasoline sales down 2% since 2007.
    • 5% increase over same time period across the rest of Canada.
  • Non-partisan policy that has aspects that both Republicans and Democrats favor.
    • Tax breaks for both high and low income populations.
  • Families, businesses and industry could control the amount of carbon tax paid by reducing their carbon footprint.
  • Promotes energy conservation and investment into productive economic activity.
    • Moves economy away from consumption and borrowing toward saving and investment.

The original Op-Ed: http://www.nytimes.com/2012/07/05/opinion/a-carbon-tax-sensible-for-all.html?_r=2&ref=carbondioxide

Mr. Hansen’s fee-and-dividend approach: http://www.columbia.edu/~jeh1/mailings/2010/20100112_PeopleVersusCap.pdf

The British Columbia Ministry of Finance Carbon Tax Review and Overview: http://www.fin.gov.bc.ca/tbs/tp/climate/carbon_tax.htm