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June 16, 2011 11:29 AM Are Energy Subsidies Doomed?

By Paul Glastris

Six months ago, Jeffrey Leonard made the case in the Washington Monthly that the time has come to eliminate federal subsidies for all energy production— not just for fossil fuels and ethanol, but for “good” renewable like wind and solar. His policy argument was that in general energy subsidies are holding back what would otherwise be a long-term market trend towards cleaner energy. His political argument was that the rise of the Tea Party and growing deficit-cutting fever have created the potential for strange-bedfellows coalitions between environmentalists and conservative budgets hawks that could lead, under the right circumstances, to across-the-board cuts in energy subsidies.

Leonard’s piece drew quite a bit of attention, including from Grist’s estimable David Roberts, who wrote two thoughtful posts on the piece. In the first he basically agreed with Leonard that getting rid of energy production subsidies makes sense as a matter of policy. But in the second he wrote that as a political matter, it’s “wildly unlikely” that this could happen because Republican lawmakers who talk a good game about deficit reduction don’t, in the end, really care enough about it to cross favored industries.

Roberts doubts are certainly well founded, and in the end he may turn out to be right. But enough has happened in the last few days to give me hope. First, on Tuesday, a measure sponsored by Sen. Tom Coburn to cut ethanol subsidies almost passed—it was killed on a procedural vote, but not before garnering 34 GOP votes. Then, today, the same measure passed, 73 to 27 . It was an amendment to a spending bill that itself might not make it. Still, it’s pretty stunning that a majority of Senators voted to eliminate ethanol subsidies. Also noteworthy is Sen. Lamar Alexander ‘s
announcement yesterday that he is putting together legislation to cut energy subsidies across the board. Again, hard to know where all of this will ultimately end up, but things are clearly moving in a direction that few people thought possible six months ago.

Paul Glastris is the editor in chief of the Washington Monthly.

Comments

  • Crissa on June 17, 2011 3:36 AM:

    I might notice that while they've ended an ethanol subsidy... They have yet to reduce the ag subsidy which pays for ethanol's creation, or reduce subsidies on dirty fuels.

    When those are on the chopping block, you can say that times are changing. I don't see a level playing field here.

  • Andy Olsen on June 17, 2011 2:26 PM:

    Prediction: This will result in incentives for renewables being cut while leaving intact subsidies for fossil fuels. Compare the votes on cuts to ethanol subsidies to votes to cut fossil fuel subsidies.

    Really, this sounds like the dingy AARP strategy of agreeing to cut Social Security benefits in the bizarre hope that Republicans will agree to higher taxes.

    Things like oil depletion allowance will be defended as simple accounting, which it is not. The oil depletion allowance is a double dipping loophole because a) all the leases and equipment for exploration and discovery have ALREADY been deducted and b) it's not like they had to purchase that oil from someone.

    This is a ruse. Period. It will disproportionately screw clean energy and enough Democrats will go along with it - count on it.

  • Dave on June 21, 2011 10:33 AM:

    The GOP controlled U.S. House of Representatives Appropriations Committee has just released information about the Energy and Water appropriations bill for the fiscal year of 2012. Nuclear energy programs would get $7.8 million more than last year and fossil fuel energy R&D would see an additional $32.4 million.
    So much for cutting all subsidies.