Subsidies: Fossil fuels favored over green energy 6 to 1

[BenIsForRon]

http://www.huffingtonpost.com/kevin-grandia/solar-power-boss-to-annou_b_334906.html

[torchbearer]

those numbers change naturally when fossil fuels become rare. The price goes up- and people(the market) will demand other sources.

[Brian4Liberty]

"Fossil fuels favored over green energy 6 to 1"

I assume you are talking about the dollar amounts in subsidies?

"A recent report by the Environmental Law Institute found that the fossil fuel sector receives about $70 billion from taxpayers in the form of subsidies every year, the renewable sector gets only about $12 billion."

[coyote_sprit]

"Fossil fuels favored over green energy 6 to 1"

Where did that come from? It's not in the story...

Are you talking about the dollar amounts in subsidies?

"A recent report by the Environmental Law Institute found that the fossil fuel sector receives about $70 billion from taxpayers in the form of subsidies every year, the renewable sector gets only about $12 billion."

[Icymudpuppy]

70 billion to 12 billion in subsidies is about 6:1. It's actually 5.83~:1

I'm sure that is what the OP meant.

Regardless, wouldn't we all be better off if there were no subsidies, and that 82billion was never collected in taxes in the first place?

[coyote_sprit]

70 billion to 12 billion in subsidies is about 6:1. It's actually 5.83~:1

I'm sure that is what the OP meant.

Regardless, wouldn't we all be better off if there were no subsidies, and that 82billion was never collected in taxes in the first place?

But think of the children, they'd freeze to death if they didn't have that propane.

[Icymudpuppy]

But think of the children, they'd freeze to death if they didn't have that propane.


Perhaps we could instill in them a good work ethic by making them collect firewood from natural windfalls. A renewable biofuel that has proven it's value as a heat source and for cooking for millions of years.

[Brian4Liberty]

"A recent report by the Environmental Law Institute found that the fossil fuel sector receives about $70 billion from taxpayers in the form of subsidies every year, the renewable sector gets only about $12 billion."

You beat me to it. I did a quick scan looking for a 6:1 quote. Found the dollar numbers after a full reading...

Yes, there should be zero subsidies, and no government favoritism (collusion).

[specsaregood]

"A recent report by the Environmental Law Institute found that the fossil fuel sector receives about $70 billion from taxpayers in the form of subsidies every year, the renewable sector gets only about $12 billion."

Not that I like subsidies. BUT I wonder what the ratio of electricity produced every year is between those fossil fuels and "the renewable sector". Or the # of companies and # of employees in each sector. I would guess much higher than 6:1. If so, then one could say the fossil fuel sector is the one screwed here.....

[jmdrake]

70 billion to 12 billion in subsidies is about 6:1. It's actually 5.83~:1

I'm sure that is what the OP meant.

Regardless, wouldn't we all be better off if there were no subsidies, and that 82billion was never collected in taxes in the first place?

Sure. That said the question remains how much of the so called "subsidy" is really in the form of "tax breaks"? Unfortunately some people include tax breaks as subsidies even though they really aren't the same thing. Say if the solar industry and the oil industry both get the same "energy research R & D tax break". The oil industries raw "dollar amount" would naturally be higher simply because it was that much bigger. If you could somehow eliminate taxes for everybody the so called "subsidy" for the oil industry would seem huge! It's possible that the whole "subsidy" argument is one big shell game based the false assumption that your tax dollars really belong to the government. (And unfortunately I know people who subscribe to that view including my federal income tax professor.)

Regards,

John M. Drake

[BenIsForRon]

I'm for eliminating all subsidies too, but this just shows how hypocritical our government is when it comes to reducing fossil fuel use. They are encouraging it in so many ways.

If anything, the subsidies for green energy are just a cover so they can continue to stimulate the coal sector.

[specsaregood]

but this just shows how hypocritical our government is when it comes to reducing fossil fuel use. They are encouraging it in so many ways.


I think one would have to answer my questions/ponderings above to make that claim definitive.

[BenIsForRon]

Not that I like subsidies. BUT I wonder what the ratio of electricity produced every year is between those fossil fuels and "the renewable sector". Or the # of companies and # of employees in each sector. I would guess much higher than 6:1. If so, then one could say the fossil fuel sector is the one screwed here.....

It's not about the amount of electricity, it's about the cleanliness of the electricity. Any stimulation for the coal industry is terrible for the future of the country. We need to get off that stuff ASAP.

[specsaregood]

It's not about the amount of electricity, it's about the cleanliness of the electricity. Any stimulation for the coal industry is terrible for the future of the country. We need to get off that stuff ASAP.

What if those "stimulations" are for clean coal research/implementation?

[jmdrake]

I found this:

http://www.elistore.org/Data/products/d19_07.pdf
• The vast majority of subsidy dollars to fossil fuels can be attributed to just a handful of
tax breaks, such as the Foreign Tax Credit ($15.3 billion) and the Credit for Production
of Nonconventional Fuels ($14.1 billion). The largest of these, the Foreign Tax Credit,
applies to the overseas production of oil through an obscure provision of the Tax Code,
which allows energy companies to claim a tax credit for payments that would normally
receive less-beneficial tax treatment.

Just as I suspected. Much of what this biased report calls "subsidy" is really tax breaks. So if you got rid of all direct payments to either industry and reduced taxes as much as possible the fossil fuel industry will still end up with the biggest "subsidy". :rolleyes: I'm no fan of big oil either but the impression being given this reporting is bogus.

Regards,

John M. Drake

[klamath]

I am in no way in favor of actual cash subsidies to any industry but I say this is playing with statistics.
Alternate energy provides 10% of our energy yet received 14 percent of the subsidies? Sounds like the Alternate energy industry is getting a bigger share of federal money.

[Brian4Liberty]

Sure. That said the question remains how much of the so called "subsidy" is really in the form of "tax breaks"? Unfortunately some people include tax breaks as subsidies even though they really aren't the same thing. Say if the solar industry and the oil industry both get the same "energy research R & D tax break". The oil industries raw "dollar amount" would naturally be higher simply because it was that much bigger. If you could somehow eliminate taxes for everybody the so called "subsidy" for the oil industry would seem huge! It's possible that the whole "subsidy" argument is one big shell game based the false assumption that your tax dollars really belong to the government. (And unfortunately I know people who subscribe to that view including my federal income tax professor.)

Regards,

John M. Drake

Ideological purity aside, if I get the government to write a law that says that I alone get a $10,000 deduction on my taxes, it doesn't matter if you call it a subsidy or a tax break, in accounting terms, it's $10k extra for me. It is a shell game alright.

[jmdrake]

Ideological purity aside, if I get the government to write a law that says that I alone get a $10,000 deduction on my taxes, it doesn't matter if you call it a subsidy or a tax break, in accounting terms, it's $10k extra for me. It is a shell game alright.

Really? Let's assume that we start of with a flat tax of 20% and you make 100K and I make 50K. Let's assume that you pass a law that says everyone's taxes are now 10%. You'll go from paying 20K per year to 10K per year. I'll go from paying 10K per year to 5K per year. In raw dollar terms your tax reduction is 10K and mine is only 5K. Your reduction is twice as big as mine because you paid twice as much tax in the first place because you made twice as much money.

Now apply this to the energy industry. The fossil fuel industry is MUCH bigger than the "clean" energy industry. Clearly they pay more tax. If they both get the same level of tax break the fossil fuel industry will end up with a much bigger RAW DOLLAR tax benefit simply because it's already much bigger!

That's what I'm saying.

Regards,

John M. Drake

[klamath]

It's not about the amount of electricity, it's about the cleanliness of the electricity. Any stimulation for the coal industry is terrible for the future of the country. We need to get off that stuff ASAP.
In your opinion. The by product of government trying to manipulate and control society and industry is what you see in our government today.
The government trying to subsidize corn ethenol production is depleting the soils of the worlds greatest bread basket called the great plains.

Have you ever grown corn? Have you seen how quickly it depletes the nitrogen in the soil that has to be replaced with nitrogen made from petro chemicals?

[BenIsForRon]

Now apply this to the energy industry. The fossil fuel industry is MUCH bigger than the "clean" energy industry. Clearly they pay more tax. If they both get the same level of tax break the fossil fuel industry will end up with a much bigger RAW DOLLAR tax benefit simply because it's already much bigger!

http://www.eli.org/pdf/Energy_Subsidies_Black_Not_Green.pdf

They were tax breaks the green sector didn't recieve, I would say it counts. Corn ethanol also got more than all renewables combined.


What if those "stimulations" are for clean coal research/implementation?

Clean coal is an oxymoron. You have to burn 20% more coal just to run the cleaning mechanism. Surface mining (how we get most of our coal) totally destroys the area where it occurs, and usually poisons water for miles around the site.


In your opinion. The by product of government trying to manipulate and control society and industry is what you see in our government today.
The government trying to subsidize corn ethenol production is depleting the soils of the worlds greatest bread basket called the great plains.

Have you ever grown corn? Have you seen how quickly it depletes the nitrogen in the soil that has to be replaced with nitrogen made from petro chemicals?

That's the work of opportunists. Monsanto and Cargill saw an oppurtunity to increase corn seed and fertilizer sales, and bought enough of Washington to make all of America throw money at that dead end for years.

So yeah, I agree with you. I think corn ethanol is one of the many ponzi schemes being run by the government.

[Brian4Liberty]

Really? Let's assume that we start of with a flat tax of 20% and you make 100K and I make 50K. Let's assume that you pass a law that says everyone's taxes are now 10%. You'll go from paying 20K per year to 10K per year. I'll go from paying 10K per year to 5K per year. In raw dollar terms your tax reduction is 10K and mine is only 5K. Your reduction is twice as big as mine because you paid twice as much tax in the first place because you made twice as much money.

Now apply this to the energy industry. The fossil fuel industry is MUCH bigger than the "clean" energy industry. Clearly they pay more tax. If they both get the same level of tax break the fossil fuel industry will end up with a much bigger RAW DOLLAR tax benefit simply because it's already much bigger!

That's what I'm saying.

Regards,

John M. Drake

Yes, I agree with your scenario. Everyone getting an equal percentage tax deduction is a great thing. But even in your scenario, if I manufacture widgets and don't get that same tax break, it's as good as a subsidy to the energy industry. That's what I'm saying.

The tax code is convoluted for a reason. And it's only getting far worse with the Health Care and the Cap and Trade scams.

[jmdrake]

http://www.eli.org/pdf/Energy_Subsidies_Black_Not_Green.pdf

They were tax breaks the green sector didn't recieve, I would say it counts. Corn ethanol also got more than all renewables combined.


The chart you posted doesn't support your argument. Sure they are "different" since a tax break for drilling oil is different from a tax break for growing corn. But your chart provides no evidence that the percentage of tax break as compared to industry size is any different. Someone else pointed to a statistic that the the "green" sector gets 14% of the "subsidies" while only providing 10% of the energy. If that stat is right then the green sector is already overrepresented.

The ethanol stat doesn't explain how much of the "subsidy" is farm subsidy that would exist regardless. And there is no comparison of the volume of the ethanol market with the rest of the "clean energy" market.

There's just not enough information given to draw a firm conclusion.

Regards,

John M. Drake

[jmdrake]

Yes, I agree with your scenario. Everyone getting an equal percentage tax deduction is a great thing. But even in your scenario, if I manufacture widgets and don't get that same tax break, it's as good as a subsidy to the energy industry. That's what I'm saying.

The tax code is convoluted for a reason. And it's only getting far worse with the Health Care and the Cap and Trade scams.

I'm taking federal income tax law this semester so all I can say is the tax law is more convoluted than I ever imagined possible. :D

That said, if I manufactured widgets I would be very supportive of a strong energy sector as I would need energy to manufacture and distribute widgets. I suppose the counter argument is I can just pay more for energy.

Here's one tax that I think is very perverse. If I make my own biodiesal and put it in my own vehicle I'm supposed to pay tax on it. Of course most people who make their own biodiesal simply don't report it. But if you do, don't drive around with a "powered by biodiesal" bumper sticker. I heard of one case why the police pulled some guy over and he got a $1,000 fine for not paying his fuel excise tax. :mad:

Oh, I totally agree with your health scare - crap and trade points.

[BenIsForRon]

The chart you posted doesn't support your argument. Sure they are "different" since a tax break for drilling oil is different from a tax break for growing corn. But your chart provides no evidence that the percentage of tax break as compared to industry size is any different. Someone else pointed to a statistic that the the "green" sector gets 14% of the "subsidies" while only providing 10% of the energy. If that stat is right then the green sector is already overrepresented.

The ethanol stat doesn't explain how much of the "subsidy" is farm subsidy that would exist regardless. And there is no comparison of the volume of the ethanol market with the rest of the "clean energy" market.

There's just not enough information given to draw a firm conclusion.

Regards,

John M. Drake

I'm saying the government is investing in the development of a harmful product as opposed to a healthy product, at a ratio of 6:1. Of course, on an individual basis, employees in the green sector get more money. A subsidy to the green energy has the possibility of being spent wisely in renewable energy companies. Coal companies will just blow it on more destructive mining and exploration.

I believe tax breaks are great too, but no reason to give them to the coal industry before everyone else. I think we could come up with some up with some reasons to give them to PV manufacturers earlier. This is how Ron Paul works, to an extent, like when he said we should give tax breaks to those driving more fuel efficient cars. A step in the right direction.

[Austrian Econ Disciple]

I'm saying the government is investing in the development of a harmful product as opposed to a healthy product, at a ratio of 6:1. Of course, on an individual basis, employees in the green sector get more money. A subsidy to the green energy has the possibility of being spent wisely in renewable energy companies. Coal companies will just blow it on more destructive mining and exploration.

I believe tax breaks are great too, but no reason to give them to the coal industry before everyone else. I think we could come up with some up with some reasons to give them to PV manufacturers earlier. This is how Ron Paul works, to an extent, like when he said we should give tax breaks to those driving more fuel efficient cars. A step in the right direction.

Actually that's not what Ron Paul espouses whatsoever. He wants NO taxation period. He knows the harm that market interference creates and this is another example. If people want other cars, then why punish? This is absurd economic and principled non-sense. Remember, Ron is an Austrian, not a GOP Reaganomic shill.

[BenIsForRon]

Actually that's not what Ron Paul espouses whatsoever. He wants NO taxation period. He knows the harm that market interference creates and this is another example. If people want other cars, then why punish? This is absurd economic and principled non-sense. Remember, Ron is an Austrian, not a GOP Reaganomic shill.

He supported a bill of that nature a few months ago, there were posts on this forum about it. I know it's controversial, but I think piecemeal is the only way we're going to get smaller government. That is outside total collapse and reorganization.

[Austrian Econ Disciple]

He supported a bill of that nature a few months ago, there were posts on this forum about it. I know it's controversial, but I think piecemeal is the only way we're going to get smaller government. That is outside total collapse and reorganization.

Well I heartidly disagree with Ron if he did propose a bill of this nature. Firstly, he knows, and I know that all taxation is inherently theft, a criminal racket. To even endorse such a measure would be heresy. Secondly, that is creating an artificial demand where there may not be one, and, end up taking vital capital away from products that we may never know what could have been. This is in one of the first chapters of Economics in One Lesson and I find it highly suspicious that Ron would overlook something so.....common sense within Austrian Econ.

The goal is to reduce and eliminate taxation, not to shift where tax money is going. Especially, not corporate favoritism and central planning. This is nothing more than a subsidy for UAW and the Automobile Industry. Highly specious.

[klamath]

I'm saying the government is investing in the development of a harmful product as opposed to a healthy product, at a ratio of 6:1. Of course, on an individual basis, employees in the green sector get more money. A subsidy to the green energy has the possibility of being spent wisely in renewable energy companies. Coal companies will just blow it on more destructive mining and exploration.

I believe tax breaks are great too, but no reason to give them to the coal industry before everyone else. I think we could come up with some up with some reasons to give them to PV manufacturers earlier. This is how Ron Paul works, to an extent, like when he said we should give tax breaks to those driving more fuel efficient cars. A step in the right direction.

What you are missing is that there is always problems created when the government controls and manipulates the country to promote ideas that seem great at the time.
Great government planers came up with the idea of sea to shinning sea. They subsidised the railroads to make this happen faster. This created the large steel and timber monopolies. The indians caused problems with this federal project so the government gave away ammo to individuals to shoot the buffalo and starve the indians out.
Or the great notion to clean up American energy production by subsidised the extraction of oil from the middle east with US service men and women's lives. Let not produce that dirty energy here.
FDR was going to get cheap electricity for the rural people so the rural electrifacation act was passed. Many rural areas depended on small run of the river hydro plants and there was hundreds of small water turbine manufacturers in the country to support this. The subsidies helped the big power companies that contracted with the federal government to buy the power from the huge federal dams (TVA, etc.) The national grid built by this by some estimate loses 50% of all electic power tranmitted. The cost per kilowatt went down but the small environmentally friendly hydro plants and manufacturers all died out.
Now the government is trying to subsidize the alternate energy industries. When these industries are promoted by the federal government and they grow huge like the railroads, what are going to be the consequenes of this seemingly great notion? Are massive banks of solar panels going to create more heat buildup? Are massive windfarms going to alter the weather patterns? We have already seen it with the renewable ethenol subsidies. It is going to deplete the soil that feeds us.
Is the federal drive to promote electric cars, going to create a massive environmental problem with acid and caustic base battery electrolites spilled on American highways? I have spent hours with my hands in gasoline but I have never put my hands in sulfuric acid or potassium hydroxide.
Will we be looking back and wondering about the collosal mess the government made out of the alternate energy field? I think the odds are pretty high.
The biggest problem with the tax code is it is used as the biggest manipulation of american society of any law on the books.

[Danke]

What you are missing is that there is always problems created when the government controls and manipulates the country to promote ideas that seem great at the time.
Great government planers came up with the idea of sea to shinning sea. They subsidised the railroads to make this happen faster. This created the large steel and timber monopolies. The indians caused problems with this federal project so the government gave away ammo to individuals to shoot the buffalo and starve the indians out.
Or the great notion to clean up American energy production by subsidised the extraction of oil from the middle east with US service men and women's lives. Let not produce that dirty energy here.
FDR was going to get cheap electricity for the rural people so the rural electrifacation act was passed. Many rural areas depended on small run of the river hydro plants and there was hundreds of small water turbine manufacturers in the country to support this. The subsidies helped the big power companies that contracted with the federal government to buy the power from the huge federal dams (TVA, etc.) The national grid built by this by some estimate loses 50% of all electic power tranmitted. The cost per kilowatt went down but the small environmentally friendly hydro plants and manufacturers all died out.
Now the government is trying to subsidize the alternate energy industries. When these industries are promoted by the federal government and they grow huge like the railroads, what are going to be the consequenes of this seemingly great notion? Are massive banks of solar panels going to create more heat buildup? Are massive windfarms going to alter the weather patterns? We have already seen it with the renewable ethenol subsidies. It is going to deplete the soil that feeds us.
Is the federal drive to promote electric cars, going to create a massive environmental problem with acid and caustic base battery electrolites spilled on American highways? I have spent hours with my hands in gasoline but I have never put my hands in sulfuric acid or potassium hydroxide.
Will we be looking back and wondering about the collosal mess the government made out of the alternate energy field? I think the odds are pretty high.
The biggest problem with the tax code is it is used as the biggest manipulation of american society of any law on the books.

Very interesting. I never knew many of those reasons the government did those things you mentioned.