US subsidies treble to renewable energies

WASHINGTON, DC, US. Federal subsidies to renewable energies in the US rose to US$4,875 million in 2007, from US$1,417 million in 1999.

This total includes US$5m in direct expenditures, US$173m in federal electricity support, US$727m in research & development, and US$3,970m in tax expenditures, explains the Energy Information Administration in the report ,'Federal Financial Interventions and Subsidies in Energy Markets 2007.’ The report was requested by Senator Lamar Alexander, to show federal subsidies and support for electricity last year.

Last year, subsidies to renewables constituted the largest expenditure of the US$16,581m provided by the federal administration, followed by US$2,828m for end use, US$2,370m for refined coal, US$2,149m for natural gas and petroleum, US$1,267m for nuclear, US$932m for coal and US$926 million for conservation.

In 1999, federal subsidies of US$8,194m were allocated to end use (US$2,135m), natural gas and petroleum (US$2,077m), renewables (US$1,417m), federal electricity programmes (US$753m), nuclear (US$740m), coal (US$567m), non-specific electricity (US$314m) and conservation (US$191m).

Energy subsidies and support from the federal government has been growing by 9.2% per year, although corresponding consumption is increasing at 0.6% per annum and energy production remains flat. Support related to power generation is estimated at US$6,700m, or 41% of total energy subsidies, and a significant portion of subsidies and support (US$1,200m) is directed to plant or infrastructure such as transmission.

Electricity production subsidies and support per unit of production vary widely by fuel. Total support amounted to US$1.65 per MWh of output, with refined coal at US$29.81 (72 billion kWh of net output), solar at US$24.34 (1 b-kWh) and wind at US$23.37 (31 b-kWh). When all renewables are included (hydro, geothermal, landfill gas, MSW), the sub-total for renewables is US$2.80 of subsidy per MWh.

The report notes that 59% of energy-related subsidies are associated with end-use applications or with fuel consumed outside the electric power sector, and totalled US$9,800m last year. About one-third of subsidies not related to electricity are directed to the promotion of alternative fuels, particularly ethanol and biodiesel.

Non-fuel specific subsidies of US$3,600m focus on energy efficiency and conservation, which the report notes can affect power consumption in the long run by reducing the need for investment in additional generating capacity and a resulting decline in fuel use. While such subsidies can affect electricity markets, they do not provide a direct or indirect subsidy to electricity generation and are outside the scope of the report.

Of the R&D for renewables, support for wind has increased from US$42m in 1999 to US$58m last year, while solar went from US$120m to US$187m and biomass from US$116m to US$246m, while geothermal declined from US$35m to US$6m. Total R&D for renewables went from US$412m to US$727m over the period.

Total federal energy-specific subsidies and support to all forms of energy reached US$16.600m in 2007, more than double the level (in real terms) of the US$8,000m in the last EIA report on subsidies completed in May 2000. Tax expenditures, one of four types of subsidies examined, have more than tripled since 1999, rising from US$3,200m in 1999 to US$10,400m in 2007.

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