Fossil Fuel Subsidies: History has shown that no energy sector has developed without subsidies. Government has often assisted fledgling industries by supplying them with financial help and incentives. The start up costs for producing oil and coal necessitated government assistance to make the products affordable for the consumers. However, that was a long time ago. Where are these companies now, as they lobby against shifting this historic support to renewable energy industries? In 2011 the Big Five oil companies made a record-high $137 billion in profits (up 75% from 2010) while receiving $2 billion in direct subsidies. $2 billion, however, is a conservative estimate, looking only at tax breaks and giveaways. Other estimates that take into account favorable loan rates, price controls, purchase requirements, and even a portion of defense spending in the Persian Gulf region estimate annual subsidies for the oil & gas industries to be anywhere from $4 billion to $41 billion.
Fossil Fuel Influence Money: So, where does all their money go? In the case of the Big Five oil companies last year, $38 billion went to repurchasing their own stocks, further enriching their shareholders. They’re holding onto more than $58 billion in cash reserves, that’s nearly 30 times the $2 billion in tax breaks they receive. They also invest heavily in “government relations.” Thus far they’ve spent at least $1.6 million on members of Congress for the current 2012 election cycle and this only considers what’s being disclosed to the Federal Election Commission. They may also be contributing substantial sums to Super Pacs like American Crossroadsand the U.S. Chamber of Commerce. Their lobbying effort is even more lavish, spending $65.7 million so far in the current 2012 election cycle. To do the math for you, that means for every $1 they spent on lobbying they received at least $30 worth of subsidies.
Smart Policy? Not only are these industries thriving and no longer in need of subsidies, but this taxpayer money is funding technologies that harm our environment. It’s undeniable that burning fossil fuels creates pollution, and the science on climate change being man-made is nearly universal. On top of this is the likelihood of more costly disasters like the Exxon Valdez oil spill and BP’s offshore drilling debacle in the Gulf. And then there is the possibility that the world’s ever-increasing consumption of oil may soon exceed what remains of this finite resource. With all these challenges, wouldn’t it make sense to more powerfully incentivize and speed the development of cleaner, renewable sources of energy?
Renewable Subsidies: Subsidies for clean, renewable forms of energy (solar, hydro, wind, etc.) are a small fraction of what flows to fossil fuels. A recent study from 2002-08 shows that while fossil fuels received $72.5 billion in federal subsidies, renewable energy was awarded less than half that, $29 billion—with most of it ($16.8 billion) going to corn ethanol, the use of which many consider to be only slightly better than refined petroleum. This leaves only $12.2 billion in subsidies to clean renewables over that six-year period. All this despite the fact that a recent Wall Street Journal poll found that 74% of Americans feel we should eliminate tax breaks for oil & gas industries and a Stanford University poll revealed that 84% of Americans are in favor of giving companies tax breaks to produce renewable power. So, why hasn’t this shift of real support to renewables happened? Why have “clean energy” bills that would help accomplish this, one after another, been voted down?
Greasing the Campaign Wheel: $334 million in campaign contributions has been lavished on key members of Congress and their “leadership PACs” by the oil & gas industry since 1990. This largesse makes the less-than-$9 million contributed by “renewables” look like chump change! Fossil fuel industries—and members of Congress whose election campaigns they generously bankroll—say that shifting the subsidies to renewables would have dire consequences on prices and on the job market. However, according to the Treasury Department, removing domestic subsidies would reduce U.S. oil production less than one half of one percent. And since the global oil market, not the domestic industry, determines gas prices, it would have no impact on prices at the pump. As to jobs, despite earning an unheard of $546 billion in profits between 2005 and 2010, ExxonMobil, Chevron, Shell, and BP reduced their combined U.S. workforce by 11,200 employees. Meanwhile a University of Massachusetts study (http://www.americanprogress.org/issues/2009/06/pdf/peri_report.pdf) found that by investing in clean energy, we’re creating two to four times more direct and indirect jobs compared to the same investment in oil and gas. But given the daily and desperate scramble for election campaign money by those in charge of making the policy, facts and studies can become less relevant.
Can Clean Renewables Power America? Many experts believe renewables could supply a lot more power to the U.S. if they had the kind of real start-up support the fossil fuel industries had and if energy markets were not so skewed by the immense subsidies that fossil fuels still receive. The private sector’s investment in renewables would greatly increase if fossil fuel industries were made to stand on their own because consumers could then decide where to buy their energy based on more comparable prices. Federal researchers estimate that wind energy could realistically supply 30 percent or more of the nation’s electricity needs and according to the National Renewable Energy Laboratory, the growing use of wind energy creates manufacturing and technical jobs, and significantly more jobs per dollar invested compared to non-renewables technology.
Wind Power: (from National Resources Defense Council http://www.nrdc.org/energy/renewables)
Wind power is an affordable, efficient and inexhaustible source of electricity. It’s pollution-free and cost-competitive with energy from new coal- and gas-fired power plants. The wind industry has been growing rapidly in recent years. In 2010 alone, 2,900 turbines went up across the United States, and today, American wind generates enough electricity to power more than 10 million homes, creates steady income for investors and landowners, and helps support over 100,000 manufacturing and ongoing operations and maintenance jobs.
- Federal researchers estimate that wind energy could realistically supply 30 percent or more of the nation’s electricity needs. With careful siting and outreach to the local community, wind farms can be built in a fraction of the time it takes to construct coal or natural-gas power plants. A 50-megawatt wind farm can be completed in less than a year.
- In the right location, it takes only three to eight months for a wind energy farm to recoup the energy consumed by its building and installation — one of the fastest “energy payback times” of any energy technology on the market.
- Although bird and bat safety are ongoing concerns, wind power does not contribute to the plethora of other environmental and public health costs caused by conventional fossil power production: acid rain in lakes, mercury in fish, particulate-matter respiratory illnesses, coal mine slag, nuclear waste fuel storage, and so on. These economic “externalities” from conventional fossil power production play out in other economic arenas, such as the $35 billion the government has paid over the last 30 years to cover the medical expenses of coal miners with black lung disease.
- Land leases for wind turbine systems help support farmers and ranchers. On a 250-acre farm, wind leases can generate about $14,000 of annual income with only about three acres taken out of production.
- The growing use of wind energy creates manufacturing and technical jobs, and significantly more jobs per dollar invested compared to non-renewables technology, according to the National Renewable Energy Laboratory.
- Wind power will expand to meet a much larger portion of U.S. energy demand. Experts at the National Renewable Energy Lab, a federal research lab, show that wind energy could supply 30 percent of the nation’s electricity without any additional technologies and forthcoming studies will evaluate even higher fractions of wind on the grid.
- A national renewable energy standard could facilitate the development of affordable wind capacity by requiring utilities to include a certain percentage of clean energy resources in their electricity mix. This would provide the stable policy framework needed to sustainably grow wind into a significant fraction of our country’s energy supply. According to the Department of Energy, a renewable standard of 20 percent — combined with efficiency programs — could save consumers billions of dollars.
Solar Power: (from National Resources Defense Council http://www.nrdc.org/energy/renewables and the U.S. Department of Energy’s SunShot Initiative http://www1.eere.energy.gov/solar/sunshot/index.html)
According to the Union of Concerned Scientists, all the energy stored in Earth’s reserves of coal, oil, and natural gas is equal to the energy in just 20 days of sunshine. While desert areas such as Arizona and Nevada get more sun than other parts of the United States, most areas receive enough sunshine to make solar energy practical. With an expanded development effort, the U.S. Department of Energy believes the price of solar technologies could decline by about 75% between 2010 and 2020, and as a result solar technologies could meet roughly 14% of U.S. electricity demand by 2030, and 27% by 2050. This would include the development of more concentrated solar power plants (arrays of mirrors or lenses concentrate sunlight to generate thermal power), and increased installation of advanced photovoltaics.
Cost of Solar Power: The cost has fallen sharply over the last 20 years, with accelerating price declines in the last 5 years. Financial analysts and industry experts expect the cost of solar power to fall below retail electricity rates in much of the country between 2013 and 2018. Presently, electricity from a concentrated solar power plant can cost about 10 to 14 cents per kilowatt-hour, compared with about 4 cents per kilowatt-hour from a coal or natural gas power plant. Electricity from small or medium-scale solar installations, such as those on homes or businesses, costs around 12 to 30 cents per kilowatt-hour, but these prices will continue to drop especially if industry is provided with incentives and tax packages from our government, federal and state. Several solar panel manufacturers are based in the United States, employing about 20,000 people in high-earning, high-tech jobs.
Solar Power’s Potential: The domestic solar industry already helps reduce our dependence on foreign oil, coal and natural gas. Massive concentrating solar-power plants will be built in the Southwest, providing clean electricity for millions of homes and businesses in the region. California’s Blythe Solar Power plant, the world’s largest, is expected to go online by 2013. According to Sandia National Labs, costs are expected to fall to about 5 cents per kilowatt-hour by 2020, a price competitive with those at new coal- or gas-fired power plants. Although commercial concentrating solar power plants have proven particularly effective in the Southwest, solar power can be used wherever the sun shines. Homeowners, farms and businesses across the country are installing solar water heaters and panels to reduce their electric bills. Many farms and businesses, with their open acreage and/or large buildings, can install enough solar to pay their entire electric bill, or at least reduce costly summer electricity rates.