Tuesday, September 23, 2008

New Study of Federal Energy Incentives

Dr. Roger Bezdek, President of Management Information Services Inc (MISI) and a noted expert on energy policy analysis, spoke at the National Press Club today, taking questions from the media on the release of a new report on federal incentives for energy development. According to the report, the main beneficiaries of more than $700 billion of federal energy incentives over the past five decades have been the oil and natural gas industries. The oil and natural gas industries together garnered 60 percent of federal incentives between 1950 and 2006, with 46 percent of the roughly $725 billion in federal support going to the oil sector, according to the MISI study.

The report shows that the oil industry has benefited from $335 billion in combined incentives, with natural gas receiving $100 billion. The MISI study also shows that, contrary to some claims, federal energy incentives have not gone to nuclear energy technologies at the expense of renewable energy sources, such as wind and solar. Of the total incentives provided since 1950, nuclear energy has received nine percent ($65 billion), while renewable energy has received six percent ($45 billion). Coal and hydroelectric energy sources, meanwhile, have received 13 percent ($94 billion) and 11 percent ($80 billion) of the total respectively. The report also indicates that since 1988, federal spending on nuclear energy R&D has been less than spending on coal research and, since 1994, has been less than spending on renewable energy research.

A PDF copy of the report is available on the NEI web site.

Update, 9/24: MarketWatch and BusinessWeek have also picked up the study.

Photo: Dr. Roger Bezdek

9 comments:

Brian Mays said...

Ah ... good news for the Rocky Mountain Institute.

More evidence that Amory Lovins is earning his paycheck (sorry ... I mean ... "consulting fees") from the oil and natural gas companies that he works with. He must be proud, or at least, he must be very comfortable. With government incentives like that for the industries he (unofficially) represents, I can only imagine what his Christmas bonuses must look like these days.

Anonymous said...

It would be great to see these subsidy numbers divided by the total amount of energy these sources have produced over the last 50 years, so that we can see how large the subsidies have been as a fraction of the energy produced. Since non-hydro renewables have been well under one percent of the total, they will have received over 90% of the research funding under this measure.

Anonymous said...

It would also be great to see how the subsidies have played out in the last 25 years.

Brian Mays said...

Well, a previous publication by MISI in Issues Online (a publication of the National Academy of Sciences, the National Academy of Engineering, et al.) has already been covered on this blog. The old article covers (for example) the Federal R&D expenses for the years from 1976 to 1993, and when it comes to subsidies vs. energy produced, it states:

"Although oil has received roughly its proportionate share of energy subsidies, nuclear energy, natural gas, and coal may have been undersubsidized, and renewable energy, especially solar, may have received a disproportionately large share of federal energy incentives."

This is not surprising.

More recently, a report by the Energy Information Administration (executive summary available as a pdf) shows that the "subsidy and support per unit of production" for 2007 are over 14 times higher for wind and solar when compared to what nuclear has received.

To be fair, this report acknowledges that its results are just a snapshot. Past subsidies/incentives and future potential of the various technologies mean that this one figure does not tell the whole story.

Still, today wind and solar are (according to the DOE) receiving US government support that is larger than the support offered to nuclear, and over an order of magnitude higher when compared on a per-unit-of-energy-produced basis.

perdajz said...

NEI's next step: same study, but now consider the other side of the coin - taxes paid.

Jim Slider said...

Perdajz,
Nuclear plants do contribute large economic benefits to their communities, states and the nation. Taxes payments are just one of those benefits. As you suggest, those tax payments are substantial and offset the investment made by government incentives. In 2005, NEI estimated that the federal tax payments for a typical new plant would exceed $20 billion over the life of the plant.

Anonymous said...

Thanks Jim,

My point about subsidies (or incentives or tax breaks) is that they must always be balanced against taxes paid, and normalized by value of the goods produced, electricity in this case. Taxes and subsidies are a little bit of a shell game, and only the difference matters. Actual numbers would be interesting.

To sum it up: nuclear power is heavily taxed, extraordinarily regulated, bound by law to account for and pay for its every externality and ensure that no member of the general public is ever harmed by its operations. Yet it is more than competitive with coal, which quite literally, gets away with murder, and could never compete with nuclear on a level regulatory playing field.

Anonymous said...

You're willing to post undocumented slander against nuclear opponents, but not replies to those posts? Rigged game.

Anonymous said...

Specifically, my reply was: Please source your claim that Lovins is employed by the oil & gas industries.