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Thursday, May 3, 2012

Level the tilted energy playing field

Two new articles by Stanford University scholars say that America's approach to clean energy needs to be reformed if it is to meaningfully affect energy security or the environment. Renewable energy technologies must survive without major subsidies, they argue.   

True enough.
The Breakthrough Institute and Brookings Institution have offered smart policy reforms that would put clean tech on a path to subsidy independence, make efficient use of scarce public dollars, and drive constant improvement in these crucial technologies.  Renewed investment in research, development and demonstration (RD&D), and in US manufacturing capability and workforce development are needed if clean energy is to prosper. After all, the shale gas revolution that today is putting pressure on renewable energy deployment was made possible by government subsidies and investment in RD&D.
But the Stanford scholars go further.  They say that clean energy must compete dollar-for-dollar against fossil fuel-based energy. Public subsidies for these technologies should be judged not just in total dollar amounts, they argue, but also per unit of energy produced.
This approach would introduce an enormous bias against clean energy. It’s not just about gigawatts. But let’s start there.
It’s absurd to suggest that the oil and gas industry is primarily – or solely - guided by Adam Smith’s invisible hand, while clean energy must be weaned from the Mother’s milk of subsidies.  A 2009 report by the Environmental Law Institute (ELI) found that the federal government provides substantially larger subsidies to fossil fuels than to renewables. Subsidies to fossil fuels totaled about $72 billion between 2002 and 2008, while subsidies for renewable fuels totaled $29 billion over the same period. Worse, the study found that subsidies to fossil fuels generally increased over the study period. Worst of all, the largest fossil fuels subsidies are in fact written into the U.S. Tax Code as permanent provisions. In contrast, many subsidies for renewable energy are short-term incentives that carry expiration dates, limiting their usefulness in stimulating investment. 

A dollar-for-dollar comparison of our energy sources must also internalize all of the costs that the fossil fuel industry has successfully externalized.  The costs of aircraft carriers in the Persian Gulf – of our nation’s blood and treasure - must be included in any fair accounting of the true cost of oil.  The 2005 Energy Policy Act exempted natural gas production from several longstanding environmental laws, including the Clean Air Act, the Resource Conservation and Recovery Act (RCRA), the Safe Drinking Water Act, and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).  And the environmental and public health impacts of coal production and combustion are immense. 

Add in the costs of global climate disruption, of the threats it poses to our national security, of  extreme weather that is now the norm, and the impacts of climate disruption on businesses generally as fossil-fueled global climate disruption races ahead, and we get closer to a fair accounting with which we can judge our energy choices. 

We need to have a rational discussion about those energy choices and their consequences, and a real plan to optimize the benefits of the natural gas boom by using it as the bridge to a renewable future.

UPDATE: Here is a must-read article on Federal subsidies for solar energy

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