Energy subsidies … How much does wind get?

Perpetually, when the subject of any form of power comes up, someone will pipe in “well, but X gets lots of subsidies … it wouldn’t make sense without subsidies”.

Exxon-Mobil, for example, justifies its $0 (yes, ZERO DOLLARS) of investments in renewable power:

Exxon does not believe renewables are commercially viable on a significant scale without government incentives and opposes such incentives.

Cough … Cough …

Well, just where does wind stand in terms of subsidy?

Carl Levesque, over at Renewable Access took a look at What is the Percentage of Federal Subsidies Allotted for Wind Power?  

Well, let us start off with a number:  $37 to $64 billion.  Okay, actually, that is two numbers (and a lot of numbers in between).  Somewhere in that range is the total of federal energy subsidies for 2003 according to the Nation Commission on Energy Policy.  

Now, let’s recall that wind is (a) a relatively new technology (okay, yes, I know about Don Quixote and windmills as I often imitate him but we’re talking about modern electricity generation) and it provides a real option for a renewable energy future.  It might (MIGHT) require a spark, a bit of a push to make it even more mainstream.  

So, of that $37-64 billion, wind’s share: less than 1%.  

Okay, that is subsidies. What about R&D money to bring along new energy sources into the economy? As Levesque notes:

In fiscal year (FY) 2006, fossil fuels got $580 million in R&D funds from the federal government. Nuclear, meanwhile, received $221 million in federal R&D money. The FY 2008 budget calls for nuclear R&D funding of $547 million. Wind energy’s FY 2006 R&D funding: $38.3 million.

All right, let’s throw into the mix another issue: stability.  Other energy forms have had decades of subsidies and support. There is some rough stability in these subsidies. Wind, however, has suffered from the turmult and uncertainty of shifting ground when it comes to the key subsidy: a production tax credit (PTC) for the first 10 years of production, paying some additional amount for each kilowatt-hour actually produced.  The PTC has been in (rapidly growing wind) and out (slowed, near stopping wind turbine installations), with just a few years lead as to whether it will be there or not. (Though, it is highly likely to be extended by the Democratic Party controlled Congress …)

Returning again, to Levesque,

With all the rhetoric out there about government subsidies — a term that has negative connotations in itself — sometimes the federal assistance that older industries receive is forgotten. It’s easy for the general public to assume that emerging and rapidly improving technologies are receiving some type of federal help, but often forgotten is that with energy being so crucial to society; virtually all segments of the sector are getting some form of subsidies from the federal government. Wind power, meanwhile, is thriving on comparatively little.

If we are to Energize America to a more prosperous and a sustainable energy future, “comparatively little” just doesn’t make sense any more.  And, “comparatively little” for wind, geothermal, ocean (wave, tidal, thermal), solar, and biomass … well … it just doesn’t cut it any more.

Basically, all energy production is subsidized in one form or another. And, that subsidy is can be explicit (cash handouts), implicit (tax breaks, lax enforcement), criminal (sweat heart deals), and damaging (“externalities”, like coal-fired electricity mercury and CO2 in the atmosphere and oceans).  One of the paths toward a better, more prosperous, and sustainable energy future is make a clear accounting and have a clear understanding of subsidies.  Because, when those last two (criminal and damaging) are counting in the equation, wind power’s “comparatively little” becomes miniscule in the equation.

3 responses to “Energy subsidies … How much does wind get?

  1. Exxon’s position isn’t really that weak. You might also ask why don’t they build coal plants? I also think the other energy companies investment in RE is symbolic rather than serious, how much do they spend looking for new oil vs R&D on RE?

  2. Green Man … with Peak Oil clearly ‘around the corner’ and quite possibly already occurred, it seems sensible for long-range strategic planning for a business to be taking its money to assure its position moving forward. Are these “oil” or “energy” companies? If the first, they will die out … at some point … by definition. If the second, they should be positioning themselves for post-peak oil energy world.

    Post Peak Oil will they make tremendous amounts of money from oil, absolutely, but if not positioned for ‘the next big thing’, they will be constrained in profit potential.

    If you look at the numbers, none of these companies is ‘betting the farm’ when it comes to renewables. But, on the other hand, they are making profitable investments that might help them be in a commanding position within a transitioning energy economy.

    As a shareholder, I believe I would be uncomfortable that Exxon is not using some of its (extensive) resources to, at least, be hedging its bets.

  3. CNN summarizes the issue:

    http://money.cnn.com/magazines/fortune/fortune_archive/2007/04/30/8405398/index.htm

    As a shareholder, I would be happy with their superior returns to industry counterparts. These guys are smart, they know the oil business, why jump into something they don’t believe in now?

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