Energy Subsidies: Part IV

Subsidies are a public policy question. That is a reasonable position to take. It seems odd that those who complain the most about the provision of subsidies to the new, renewable energy industries and for energy conservation programs are the current recipients of some of the richest, most far reaching subsidies ever given in the past 100 years.

As to these generous subsidies, according to Pfund and Healey’s work; “What Would Jefferson Do?” Oil has received subsidies since 1918. Solar (and other renewables) have received subsidies since 1994. On an annualized average, oil has received subsidies equal to about 5 billion dollars per year since 1918 while renewables have received about .4 billion dollars per year since 1984.

To allow us to enhance our security, and maintain a sustainable standard of living, these new renewable industries must receive subsidies in the name of sound public policy in order to become mainstream. The debate is really centered on where should we place our public investments.Oil

The point here is that the tax code was used to establish a new industry about 100 years ago…oil…and it has now become a key component of the industry that is permanently enshrined in the law. When these subsidies are challenged, the oil industry warns of Armageddon to the energy supply if they are not continued.

Thus, one might argue that on a lifecycle basis, oil is apparently not sustainable without subsidies.

Solar, on a lifecycle basis has only had subsidies for about 18 years, clearly needs those subsidies to get off the ground (just like oil since 1918). On a lifecycle basis, the money spent on solar appears to represent a more sustainable use of funds as it takes advantage of a renewable energy source rather than a limited source of fossils.

Or does it? If you read my earlier post on the environmental risks of solar manufacturing and disposal, maybe that is not the case…more later.

Every company that pays taxes takes advantage of the tax code to maximize their profits…this may or may not be sound public policy…but is all based on a subsidy; aka the tax code. So how did we get to our current standard of living and security? History has shown us that with many, many public subsidies in the
19th and 20th centuries, private companies were given access to publicly owned resources allowing for inexpensive extraction…and thus, allowed to use the public trust to manufacture and build their industries. Should this continue?

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