Energy — Government Priorities

The federal government continues to provide subsidies to nuclear, coal and oil industries. According to the Union of Concerned Scientists, the Energy Information Administration’s latest report is flawed, containing inaccurate information regarding the areas of federal subsidies which went to nuclear and fossil fuel industries.

According to the UCS, the EIA concedes that its methodology failed to account for all subsidies that benefit conventional energy sources. Its consistent under-reporting over the yeas has enabled advocates of fossil fuel and nuclear technologies to falsely claim that they benefit from very few federal energy subsidies compared to renewable energy technologies. The principal flaw in EIA’s methodology is that that they adopted a ‘snapshot’ approach to measuring subsidies by only looking at a single year, 2010. By doing that, EIA failed to include the massive federal subsidies that the fossil fuel and nuclear industries have enjoyed for decades; benefits they presumably will continue to receive unless congress acts to limit them. Conversely, relatively new subsidies for wind and other renewables last for a finite period, 10 years after a renewable facility begins operation. The EIA also failed to account for subsidies available to the oil, gas, coal and nuclear industries that they have not yet realized. For example, congress has enacted numerous large new subsidies in recent years such as loan guarantees and production tax credits that would greatly benefit new coal and nuclear plants, but because these facilities have yet to be built, the EIA did not include the subsidies in its calculations. As a result the EIA did not report the enormous influence these programs have on the economics of new energy investments. Last year the UCS calculated the benefit of new, uncounted subsidies for new nuclear reactors under the Energy Policy Act of 2005 at as much as $5 billion per reactor! Meanwhile, a February 2011 UCS report, “Nuclear Power: Still Not Viable Without Subsidies” shows that nuclear power has benefitted breatly from subsidies since its inception more than 50 years ago, yet the EIA report left them out as well. Existing and new subsidies mask nuclear power’s considerable costs and risks. This is not the first time the EIA has issued a flawed analysis. A 2010 report by Doug Koplow of Earth Track, “EIA Energy Subsidy Estimates: A Review of Assumptions and Omissions“, for example, identified numerous omissions in the EIA’s 2007 federal subsidies report that undercounted billions of dollars in direct and indirect subsidies to conventional energy sources. Koplow identified a number of problems with the EIA’s methodology, ranging from using a limited number of sources to ignoring many energy sector subsidies.