Clean Energy Subsidies and the Presidential Debate

In last night’s Presidential debate, Governor Mitt Romney stated Clean Energy subsidies in Obama’s 2009 Recovery Act were $90 Billion in one year, while Oil and Gas subsidies are only $2.9 Billion per year.  He also stated that half the companies subsidized failed.  President Obama didn’t give a response, but I will. First off, the $90 Billion was not all handed out in one year, it’s a program that lasts over a number of years. Second, Clean Energy is a new industry, and should enjoy assistance until economies of scale can kick in.  The Fossil Fuel industry started at the beginning of the 20th century, and matured during World War II.  Here’s a quote from an excellent article on this topic:

...between 1918 and 2009, the oil and gas industry received a cumulative $446.96 billion in subsidies compared to just $5.93 billion given to renewables in the years between 1994 and 2009. Meanwhile, the nuclear industry benefitted from a cumulative $185.38 billion in federal subsidies between 1947 and 1999.

http://www.carbonbrief.org/blog/2012/08/has-there-ever-been-a-level-energy-playing-field-putting-renewables-subsidies-in-context

The analysis this article refers to doesn’t include the $90 Billion in the Recovery Act, but even adding that in, you can see we have a long way to go to match the $446 billion oil and gas has enjoyed.

As for whether the government should be able to pick winners and losers, there is a tradeoff to be made here.  Our government can do nothing, and let entrenched industries strangle innovation (our policy from 1968 to 1992 with the exception of some Carter initiatives), or we can give a boost to an industry that shows promise of removing the damage to our health, our environment and our climate that the established energy sources do not.  Our representatives and our administration may do a bad analysis, as they did when they pushed for corn based fuel sources, but it doesn’t mean we should try to make a change for the better.

Also we need to consider that in a new industry, there will be a lot of losers.  Experimentation and innovation invites the chance of failure.

In the Gas industry, companies spent billions in the past 10 years, some of it our tax dollars, building import terminals to take compressed natural gas off ships and put into pipelines across the country.  Now, thanks to the expanded use of hydraulic fracking, those facilities are useless, unless they spend billions more converting them to export the excess natural gas we are now pumping out of the ground (Plenty more can be said about hydraulic fracking, check out nogaspipeline.org).

In the Solar industry, we have Solyndra, which bet that the price of polysilicon would remain high and was wrong and didn’t have a fall back plan.  Our tax dollars gave them a start, and when they asked for more two years later, we said no.  How is that a failure of our subsidization process?

So when someone tells you the Clean Energy subsidies are too expensive, remind them that subsidies for the Coal, Oil, Gas, and Nuclear were all much higher in their first 40 years.  Remind them that the decision to use these resources ignored the environmental, and thus economic damage that ensued.  Remind them that jobs that capture a renewable resource will never go away.