Energy Incentives

How do energy incentives compare?

The spring Issues Online examines the various types of energy subsidies.

Tax policy creates the largest transfer of money to energy companies:

Energy Incentive by Type

Oil companies have been the beneficiary of almost half of all incentives:

Energy Incentive by Energy Source

Since 1976, when energy policy decisions became less haphazard, the two largest recipients of research and development funds have been photovoltaics (solar panels) and solar thermal (heating water, or concentrating the sun’s rays for a conventional power plant):

Federal R&D 1976 - 2003
LEGEND: PV: Photovoltaic (renewable); ST: Solar Thermal (renewable); ANS: Advanced Nuclear Systems; CS: Combustion Systems (coal); AR&T: Advanced Research and Technology (coal);LWR: Light Water Reactor (nuclear); Mag: Magnetohydrodynamics (coal); Wind: Wind Energy Systems (renewable); ARP: Advanced Radioisotope Power Systems (nuclear).

Another article by the same authors looks at how the US spent $644 billion (2003 dollars) in energy subsidies between 1950 and 2003.

The link to post an image of the table isn’t working, so here are the large numbers:

  • Nuclear — $61 billion incentives in R&D, $10 billion regulation, and -$8.3 billion in disbursements. (see below, Price-Anderson) Total: $63 billion
  • Hydro — $54 billion in market activity, and $15 billion in regulation and taxation. Total $73 billion
  • Coal — $27 billion in R&D, $33 billion in regulation and taxation, $13 billion in government services. Total: $81 billion
  • Oil — $155 in taxation, $106 billion in regulation, $27 billion in government services. Total $302 billion
  • Natural Gas — $76 billion in taxation, $6 billion R&D. Total: $87 billion
  • Solar — $16 billion in R&D, $12 billion taxes. Total: $33 billion
  • Geothermal — $3 billion R&D, $1.4 billion each in taxation and market activity. Total: $5.7 billion
  • The disbursement of -$8.3 billion for nuclear energy comes from the tenth of a cent/kWh paid for nuclear power into the nuclear waste fund.

    Price-Anderson Act

    The Price-Anderson Act requires the nuclear industry to obtain maximum insurance ($300 million/plant), and to be able to contribute up to $96 million for more expensive accidents at any US nuclear power plant. Any expenses in a nuclear accident above $10 billion would be paid by the federal government. As of now, $151 million have been paid for industry claims ($70 million for Three Mile Island, and the rest?)

    More on the history of the Price-Anderson Act.

    Thanks to the NEI blog for the link and extra information.

    Making subsidies fair

    It is not important that energy incentives be fair, but that we get good energy policy for our money. Solar power, both photovoltaic and solar thermal, require more R&D and direct purchase subsidy than does wind. This is important as solar is expected to be an important part of energy supply in the future, though it will be many decades before solar power will provide more than 20% of our electricity. Even though wind power provides significantly more electricity, it doesn’t require the same subsidy as PV. Fair is what helps us, today and tomorrow. Some of the investment in coal power R&D makes sense. Hopefully, another analysis will examine where our subsidy policy, with its emphasis on tax breaks for oil, makes sense, and where it should be changed.

    2 Responses to “Energy Incentives”

    1. Jon Wharf says:

      I thought the disbursements represented:
      – payment into waste fund
      – funding for the NRC
      and perhaps
      – regulated overpayment of insurance (PA)
      It definitely doesn’t represent the “balance” of a potential fund that doesn’t exist. The payments by nuclear operators to date have not come from the PA common funding scheme – they have all been from indivdual site insurance.

    2. Karen Street says:

      Thanks Jon!

      I’ve corrected the original post.