Discussing Energy Economics on the Internet

Where the Money Goes

Posted in Renewables by Cheryl Morgan on the September 9th, 2008

The EIA has some interesting data out on the level of subsidies received in the US energy industry in 2007. Wind power is the sector receiving most total benefit – $666m from the production tax credit. However, in terms of dollars per MWh of generated power, refined coal turns out to be the most subsidized fuel.

It is worth noting that the numbers refer to direct energy subsidies only. Governments have all sorts of ways of directing money to established industries, and the renewables community often complains that the true level of subsidies to other fuels are not seen. In particular it is sometimes argued that a large portion of the US military budget is, in effect, a subsidy to the oil industry. Also the EIA notes that this narrow definition of subsidy excludes the whopping $3.0bn given to the ethanol industry under the Volumetric Ethanol Excise Tax Credit.

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