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U.S. Federal Renewables Subsidies Drop

solar panels

Total renewable-related federal subsidies in the United States dropped to US$6.7 billion in financial year 2016 from US$15.5 billion in FY 2013, a new report by the U.S. Energy Information Administration (EIA) showed.

Subsidies for renewable energy, including biofuels, accounted for between 42 percent and 52 percent of total federal energy subsidies in each of the years 2013 through 2016, the EIA said in its report.

The federal interventions that the EIA has taken under consideration in its report include cash payments directly to market participants in the form of grants, loans, and other financial assistance; estimated tax expenditures; investments in research and development (R&D); and credit subsidies to recipients of federal loan guarantees.

Tax and direct expenditures combined accounted for around 93 percent of all federal renewable-related subsidies for each of the years analyzed. In FY 2016, tax expenditures alone accounted for 80 percent of total renewable energy subsidies.

Between fiscal years 2013 and 2016, direct federal financial interventions and subsidies in U.S. energy markets almost halved, from US$29.3 billion in FY 2013 to US$15.0 billion in FY 2016, EIA data shows.

U.S. federal subsidy support for fossil fuels plunged from nearly US$3.9 billion in FY 2013 to US$489 million in FY 2016.

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“Within those fossil fuel subsidies, support for coal slightly increased, while support for natural gas and petroleum liquids decreased substantially. In FY 2016, certain tax provisions related to oil and natural gas yielded positive revenue flow for the government, resulting in a negative net subsidy of $773 million, based on estimates from the U.S. Department of Treasury,” said the EIA.

Last year, wind power for example generated a record 6.3-percent share of total U.S. electricity, with four states generating more than 30 percent of their electricity from wind, according to the American Wind Energy Association (AWEA). Last year, Iowa, Kansas, Oklahoma, and South Dakota were the states that generated over 30 percent of their electricity from wind energy. Across the United States, 14 states currently generate more than 10 percent of their electricity from wind.

By Tsvetana Paraskova for Oilprice.com

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