November 02, 2012

Obama on Clean Energy: Actions Speak

Cross-posted from Environmental Law Prof Blog.

Unlike climate change, clean energy policy has received a fair bit of attention in the presidential campaign. Obama made clear that he supports renewable energy as part of his "all of the above" approach, while Romney would end an important federal subsidy for wind power and otherwise increase reliance on coal, oil and gas. But for those who are disappointed that Obama didn’t say more about our need to transition away from fossil fuel and towards renewables, remember the old adages “actions speak louder than words” and “put your money where your mouth is.” Here are some facts about Obama’s actions and expenditures:

First, we must recall that subsidies for fossil fuels have been a fixture in US energy policy. As discussed in a recent report by venture capital firm DBL Investors, these subsidies have come in many forms including direct payments and preferential loans; favorable tax treatment; and government investment in R&D and infrastructure. Coal mining companies have enjoyed generous tax treatment since the early 1930s, and the government’s investment in geological surveys and railroads also greatly facilitated coal-fired electricity. Natural gas combustion technology benefited from billions of dollars worth of jet engine technology research funded by the Department of Defense research. The report finds that, in total, the oil and gas industries received about $350 billion in subsidies between 1918 and 2009.

But that’s not all. Fossil fuel companies enjoy an incredibly huge subsidy because we don’t pay the full social and environmental costs of fossil fuels. Both conventional fossil fuel pollution and carbon pollution impose significant costs on society. For example, a National Research Council study, The Hidden Costs of Energy, calculated aggregate health and environmental damages associated with conventional air pollution emissions from coal-fired power plants in 2005 at approximately $62 billion. The health and environmental damage caused by carbon pollution is referred to as the “social cost of carbon.” EPA’s estimated the social cost of carbon at $21 per ton, but a recent study suggests that the real cost is between $55 and $266 per ton. If the latter estimate is correct, US power plants received a subsidy of between $133 and $644 billion in 2010 based on their 2.4 billion tons of carbon emissions.

So what happened with energy subsidies during Obama’s administration? Importantly, Obama has repeatedly proposed reducing or eliminating subsidies for fossil fuels. Also, under Obama, renewable energy started receiving significant federal subsidies. The American Recovery and Reinvestment Act of 2009 committed $21 billion to renewable energy. As a result, the US Energy Information Administration reported that in fiscal year 2010, renewables received 55% of the federal electricity production subsidy pie ($6.6 billion) while fossil fuels received 15% ($1.8 billion). Of course, it bears reminding that (1) this money only lasted a couple years, and (2) if you consider the environmental and social costs imposed by fossil fuels, then fossil fuels still won hands down.

In sum, Obama has taken action and dedicated significant resources to support renewable energy. With another four years, there is a good chance that the country will continue to move forward in transitioning from fossil fuels to renewables.

Lesley McAllister, CPR Member Scholar; Professor of Law, University of San Diego School of Law. Bio.

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