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A Level Playing Field: Why Solar Subsidies are Just as Fair as Oil and Gas Subsidies

Many times in this blog, we inform our readers about solar hot water subsidies and tax breaks. Well, some people comment to me that solar should stand on its own and shouldn’t be subsidized…except what about all of the oil and gas and coal subsidies?

And yet, a number of people say that solar shouldn’t have subsidies, and that the technology should stand on its own and that the government shouldn’t be supporting solar subsidies. My answer to that is this: fine.

That is, I understand the concern that tax payers shouldn’t subsidize a relatively new energy technology and that the market should determine price.

However, if you’re going to play that free market game, then it’s only fair that oil, coal, and gas companies play by the same rules, right? Therefore, oil, coal, and gas companies shouldn’t get subsidies either, and boy do they get subsidies.

  • FACT: From the New York Times: “According to the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9%, significantly lower than the overall rate of 25 % for businesses in general and lower than virtually any other industry.
  • And with oil’s windfall, low-taxed profits since 2008, when oil prices sky rocketed, talk about a subsidy! But let’s dig further.
  • FACT: Also mentioned in the same article is the fact that the oil and gas industry spent $340 million on lobbyists since 2008, according to the nonpartisan Center for Responsive Politics, which monitors political spending.
  • FACT: According the Environmental Law Institute study, between 2002 and 2008, the coal and oil companies received $72 billion over the seven-year period, while subsidies for renewable fuels totaled only $29 billion. That’s 3.5 times as much.  But we can dig even further…
  • FACT: President Obama’s 2011 fiscal year budget proposal sent to Congress calls for eliminating more than $2.7 billion in tax subsidies for oil, coal and gas industries. If passed, U.S. Tax payers will save (not give oil companies) 38.8 billion dollars.

I don’t get it. Why should we be subsidizing technologies that have been around for 100 years? Shouldn’t the oil and gas industry “stand on its own” and let the free market decide the winners and losers?

So, yeah, solar needs subsidies to encourage Americans to change their minds and break from the coal and oil status quo. But if you want to talk about solar’s high cost, then one wonders how much coal and oil would really cost without American tax payers subsidizing their dirty-air profits.

One last dig into coal and oil costs:

  • 29 miners lives were lost in the Upper Big Branch Mine disaster in 2010.
  • Another 11 lives were lost in the BP oil explosion.
  • Thousands more lives have been lost in similar fossil fuel energy accidents in the last 100 years.

There has never been a single day in recorded history when so many lives were lost to solar technology in one day in a single event, and I doubt there ever will be.


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5 Responses to A Level Playing Field: Why Solar Subsidies are Just as Fair as Oil and Gas Subsidies

  1. This is very interesting information. I would like to know if there are same sort of subsidies and tax breaks for the fossil fuel industry in Canada. Are there subsidies for solar and renewable energy industries in Canada? Could anyone in this group comment knowledgeably on this aspect?

    Also, to bring the cost of new technology down, research and development are necessary. During the Second World War and the First World War, there was an enormous push by governments around the world to invest in the development of petroleum-based technology. The public was offered an opportunity to be patriotic and to save money at the same time, by buying war bonds. The American government and the Canadian government engaged in a massive marketing and publicity campaign in order to convince people to buy these war bonds and so invest in the new petroleum-based technology. The government used famous artists and movie stars like Errol Flynn, Al Jolson, Elsie Janis, Mary Pickford, Douglas Fairbanks and Charlie Chaplin in their marketing campaign to make posters, and used movie stars to host bond rallies.

    There was a rapid jump in petroleum-based technologies during those war years as a result of this investment and education and concentrated mobilizing of the public and of industry. It is reflected in everything around us today. Our ability to travel the globe by air, the fabrics that make up our clothing, furniture, food packaging, pens, the paint on our walls – just look around the room for things made of plastic or that have petroleum components in their make-up. You will see plenty.

    When the future of so many species, including our own, is at stake, why can’t we market and invest in green technology in the same manner now? I am sure that there are no shortage of movie stars, artists, or musicians today who would happily be spokespeople. When the costs come down, folks will see a profit in these new technologies, rapidity of the development and investment will increase.

    Any famous talented folk out there who would participate or care to comment?
    If we all suggested this to our elected representatives, do you think we could get them to move on this?

  2. Solar Fred says:

    Hi, Christine. Thanks for your thoughts.

    The only solar subsidies that I know of in Canada are in Ontario. They have a fairly good Feed-in-Tariff that will pay a pretty good rate for every solar watt that is produced. There are a few catches there, which I won’t get into, but it’s headed in the right direction. Not sure about any other subsidies.

    As for coal and oil subsidies, again, I’m not familiar with that policy, but I would expect that there are many subsidies for these companies. Perhaps the most egregious policy right now is supporting the so called “oil sands” projects. This is a costly, environmentally disastrous way to get oil out of sand and then ship it to the U.S. Please google more about it, but there is so much energy wasted to get a little bit of oil. Naturally (or I should say un-naturally) the environment pays a heavy price as well.

    Thanks for commenting and your support.

  3. Christof says:

    And, globally, fossil fuels continue to receive huge subsidies that far outstrip those for renewables:

    According to figures from the International Energy Agency, fossil energies got about $550 billion in subsidies in 2008, compared to $50 billion for renewables.

  4. Demian Blair says:

    I came across a very similar article on the same site (http://www.eli.org/pressdetail.cfm?ID=205) while researching a paper on Renewable Energy Incentives for a business law class. The presentation for my paper is still posted online at: http://dkblair.atspace.com/index.html if you’re bored :D

    It’s disturbing that we continue to subsidize fossil fuels so heavily when it is renewable energy that we need! Just imagine if that $550 Billion in 2008 worldwide subsidies was spent on solar, wind, hydro, geothermal, biomass….or pretty much anything other than coal and oil! Imagine how much better off we would be today… Of course Solar is expensive when we spend so much to make coal and oil cheap!

    And as for why we are subsidizing 100 year old technology well you said it yourself: “the oil and gas industry spent $340 million on lobbyists since 2008.” :(

  5. Solar Fred says:

    Thanks for contributing your thoughts and paper, Damian!

    We don’t have 340 million, but we do have free blogs and a lot of motivated advocates.

    Consumer and public education is key, so be sure to post it to Linked in groups or Twitter or anything else!