Energy Subsidies

The government sure spends a lot of money subsidizing energy.

Since 1999, federal energy subsidies have more than doubled—from $8.2 billion to $16.6 billion in 2007. Who gets the most? “Renewables” landed $4.8 billion last year, but that includes $3.25 billion for ethanol and other biofuels. Coal and cleaner-burning “refined” coal took home $3.3 billion, while the nuclear power industry got $1.3 billion. In all, about 40% of the energy subsidy pie went toward electricity production; the rest for things like alternative fuels and energy conservation.

Federal energy subsidies seem to dominate discussion on the Hill (and overseas), from appeals by the renewable-energy industry to extend tax breaks for wind and solar power, to U.S. support for corn-derived ethanol. Sen. Alexander (R-TN), armed with the Energy Information Agency numbers, argued against the current subsidy mix in proposing his own version of clean-energy subsidies a few weeks ago.

But the raw numbers don’t tell the story. What does is how much cash the government hands out per unit of electricity produced. The winner there is refined coal, at $29.81 per megawatt hour. That’s even more than solar power ($24.34) or wind ($23.37). Nuclear power received $1.59 per megawatt hour. Regular coal took home $0.44 per megawatt hour, while the least-subsidized of power fuels was natural gas, which got just a $0.25 boost per megawatt hour.

Refined coal (coal-based synthetic fuel...which still isn't very clean stuff) supplies just 1.8 percent of the nation's electricity.  However, it was subsidized with over $2.1 billion in taxpayer dollars in FY07, nearly one-third of the total the government provided to those who generate and distribute our power (see table ES5 at this link).

When one adds up the figures, the average subsidy last year for a megawatt-hour of electricity was $1.65.  Hydro, which provides the majority of the electricity for us here in the Northwest, received just $0.67 per megawatt hour.