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Renewable energy the big winner when it comes to federal subsidies

By Tom Gantert
The Center Square

Renewable energy, led by wind and solar, received $15.6 billion in federal government subsidies in fiscal year 2022, far more than fossil fuels.

The coal industry received $873 million and natural gas and petroleum liquids industry received $2.3 billion, according to a recent report from the Energy Information Administration.

Critics say the billions in subsidies allow renewable energy to masquerade as affordable by offsetting their costs through government spending. Advocates say the government's transition from subsidizing fossil fuels to renewables is long overdue and needed to move this country to a cleaner form of energy.

Renewable energy was boosted by $69.3 billion in federal subsidies from 2018 through 2022, according to the Energy Information Administration. By comparison, coal received $10.8 billion over that same five-year span.

"Energy subsidies are not a necessity for any energy source; they are a way for government to have a hand on the scales in energy production," said Paige Lambermont, a research fellow for the Competitive Enterprise Institute, in an email to The Center Square. "Government subsidizes less reliable 'renewable' energy over more reliable energy. Energy subsidies undermine the electricity market by allowing renewables, namely wind and solar, to masquerade as affordable by offsetting their costs through government spending."

Lambermont said subsidies allow less economically viable technologies to appear in the marketplace as though they were more affordable to build than they are.

"When technologies like some renewables, namely wind and solar, have artificially low prices this discourages more reliable sources like natural gas, coal, and nuclear from being built and maintained," Lambermont said. "This problem is only exacerbated by state level mandates that require the use of renewable electricity."

Dan Kish, senior fellow at the Institute for Energy Research, said the federal subsidies will increase more after the passing of President Joe Biden's Inflation Reduction Act in August 2022.

"Those numbers [in the EIA report] were before the impact of the Inflation Reduction Act, which has morphed into a climate bill," Kish said in an email to The Center Square. "The subsidies in that will dwarf anything that is in these numbers."

The White House stated the Inflation Reduction Act includes nearly $11 billion "to build clean, affordable and reliable energy ..."

Gregory Wetstone, president and CEO of American Council on Renewable Energy, said the Information Reduction Act "leveled the playing field" for renewable energy when it came to federal subsidies.

“For more than a century, our nation’s tax code had been weighted to promote fossil fuels," Wetstone said in an email to The Center Square.

Wetstone said the Inflation Reduction Act included long-term incentives for "renewable energy, domestic clean energy manufacturing and key grid technologies, like energy storage."

"Hundreds of billions of dollars have been committed to new clean energy investments over the past year," Wetstone said. "This investment will lead to dozens of new manufacturing facilities across the U.S., thousands of megawatts of additional wind and solar power capacity, hundreds of thousands of good-paying jobs, significant cost savings for American electricity consumers, cleaner air, and progress toward a more stable climate.”

The United Nations advocated for taking away subsidies for fossil fuels and giving it to renewable energy.

"Fossil-fuel subsidies are one of the biggest financial barriers hampering the world’s shift to renewable energy," the United Nations stated on its website. "Shifting subsidies from fossil fuels to renewable energy not only cuts emissions, it also contributes to the sustainable economic growth, job creation, better public health and more equality, particularly for the poor and most vulnerable communities around the world."

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