Avoid Conflating Renewables and Fossil Fuels in the Subsidies Debate

Here at the American Council for Capital Formation, we have contributed extensive commentary to clarify the definitions of subsidies, deductions, and various tax provisions and their implications on public policy. Often times, we have witnessed progressive public officials, some academics, and even multilateral bodies such as the G-20 and IMF call for the elimination of so-called “fossil fuel subsidies.” These critics have alleged both the U.S. and global fossil fuels industry benefit by subsidies from U.S. and international governments, when the reality couldn’t be further from the truth. Traditional energy producers do not receive subsidies from the United States government – they take tax deductions much like virtually all other manufacturers.
The latest allegation comes from libertarian-leaning Cato Institute in a new analysis released in late December that looked specifically at Department of Energy (DoE) subsidy programs. The analysis’s author correctly pointed out a number of past and current DoE projects where taxpayer dollars have been wasted on mismanaged on ill-conceived projects. They are detailed in nine case studies to substantiate their case to get rid of all subsidies for solar, coal, wind power, and hydrogen fuel programs.