In my May 10, 2013 Santa Maria Times editorial about proposed new oil drilling in the Orcutt Hills, I wrote that renewable energy should be subsidized as the primary energy source for our future. Another editorial writer in The Times asked how this would be funded.
Answer: the same way energy technologies of the 18th, 19th and 20th Centuries were funded – by the federal and state governments. As the emerging technology of the 21st Century, renewables should be subsidized the way other energy technologies have been throughout U.S. history.
In the late 1700s, Congress enacted a tariff to protect the fledgling coal industry from British imports, giving American producers a major cost advantage. Pennsylvania exempted coal from taxation, publicized its advantages, and conducted geological surveys showing companies where it was located. By 1837, 14 states had followed Pennsylvania’s lead.
Since 1918, oil and gas industries have benefitted from federal tax policies, research and development, and regulations that promote trust in their industries. In 1990, the General Accounting Office documented that the marginal effective corporate tax rates for domestic petroleum production were among the lowest for a major industry. In the 2005 energy bill, Congress exempted natural gas drillers from parts of federal clean water regulations, thereby relieving them from remediating impacts to groundwater.
Since construction of the Erie Canal, the federal government has been involved in building canals and ports, dredging, and providing waterways that subsidize the transport of coal and oil, among other things.
Beginning in 1947, the federal government provided research and development to support nuclear energy. The Price Anderson Act of 1957 provided federal indemnification for utilities in the event of nuclear accidents. This industry would never have been developed without this protection because the liability is too great. The cost of regulation—especially important for nuclear energy—was also a subsidy.
During their lifetimes, direct annual subsidies have averaged $4.86 billion from 1918-2009 to oil and gas; $3.5 billion to nuclear from 1947-1999; and $370 million to renewables from 1994-2009.
During the first 15 years of each of these energy resources, a critical time that helps them to become competitive, the subsidies were also lopsided. As a percentage of inflation-adjusted federal spending, nuclear subsidies accounted for more than 1 percent of the budget, oil and gas subsidies were a half percent, and renewables received only about one tenth of a percent. So, government commitment to developing new energy sources has been 10 times greater for nuclear and five times greater for oil and gas than for renewables.
None of the above counts the research and development that came out of NASA or the military resources used to develop nuclear weapons and ensure the free flow of foreign oil.
The federal government continues to subsidize energy sources to help our economic growth.
Solar and wind power are the technologies of the future. They don’t add to climate change. They don’t require strip mining or fracking. They don’t pollute groundwater. They don’t pose the risk of radioactive exposure. And the rest of the world is working to develop these technologies. We will be left behind if we don’t up our game now.
Even though coal, oil, natural gas and nuclear are riskier to extract and use, some people cling to the idea that these 18th, 19th and 20th Century energy sources are the only way we can get adequate energy in the future.
We made it to the moon when we believed in ourselves. We can do the same with renewable energy. It’s time to commit to renewables and make them our primary energy source for the 21st Century.
Published in the Santa Maria Times June 14, 2013. Ken Hough is executive director of Santa Barbara County Action Network (SB CAN). He can be reached at [email protected]. Looking Forward runs in the Santa Maria Times every Friday, providing a progressive viewpoint on local issues.