Renewable Energy Government Funding
Renewable Energy Government Funding – Direct US subsidies to the fossil fuel industry are estimated at $20.5 billion annually, including $14.7 billion in federal and $5.8 billion in state grants. When external factors such as health, environmental and climate factors are included, the United States is estimated to subsidize fossil fuels worth $649 billion annually. Eliminating fossil fuel subsidies could reduce greenhouse gas emissions while saving taxpayers money.
This document reviews President Biden’s Executive Order 14008 for 2021 addressing the domestic and international climate crisis, the Fiscal Year 2022 budget proposal, and Congress’ recent actions to outline possible ways to reduce the US government’s fossil fuel subsidies. . .
Renewable Energy Government Funding
Executive Order 14008 calls for the removal of fossil fuel subsidies on and after the 2022 budget request. The Biden-Harris administration’s 2022 budget seeks to achieve this goal by eliminating 13 fossil fuel tax credits, which will increase federal revenues by approximately $35 billion over the next decade. During the same period, an additional $86 billion will be provided for tax reform on imports of fossil fuels abroad. “These oil, gas and coal tax cuts distort the market by encouraging more investment in the fossil fuel sector than would happen in a neutral tax system,” the Treasury Department explains.
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The fossil fuel industry is also subsidized by low rents and low royalties for fossil fuels on public land. Sub-market rents on federal land start at $2 per acre, which has not changed since 1987 and the land royalty rate has remained at 12.5% since 1920. The Congressional Budget Office estimates that raising the onshore royalty rate to 18.75% for the new package would increase federal revenue by $200 million over 10 years, equal to offshore royalties. Executive Order 14008 directs the Secretary of the Interior to “suspend new oil and natural gas leases on public lands or coastal waters until a comprehensive review and review of federal oil and gas licenses and leases is complete.” Executive Order 14008 also requires that coal, oil and gas royalties be adjusted to account for climate costs.
The Department of Energy (DOE) has historically subsidized fossil fuels through research and development (R&D). Between 1978 and 2018, 24% of the DOE’s research and development budget was spent on fossil fuels. However, Executive Order 14008 requires government agencies like the DOE to “take action to ensure that federal funds do not subsidize fossil fuels directly.” The DOE’s 2022 budget request calls for the removal of direct subsidies for fossil fuel research and development by re-prioritizing or eliminating funding for the following programs:
Between 2015 and 2020, DFC’s predecessor, Overseas Private Investment Corporation (OPIC) and US Export-Import Bank (EXIM), spent more than $13 billion on offshore fossil fuel projects. Executive Order 14008 urges DFC and EXIM to “identify what the United States can do to halt international financing of fossil fuel energy while promoting sustainable development and green recovery.” In April 2021, DFC committed to achieving net zero emissions across its portfolio by 2040. All sharing options: We must accelerate clean energy innovation to avoid the climate crisis. how?
“Innovation” is a powerful concept in climate policy. For years it has been used as a fig leaf to cover up delay tactics, as if climate change had to wait for some sort of technological breakthrough or miracle. This has long left climate advocates skeptical of the concept and hostility to its proponents.
File:figure 2 Obligated U.s. Government Funding For Clean Energy Cooperation With China, By Fiscal Year, 2008–2015 (28102751703).jpg
However, this has recently changed. Perhaps some Republicans in Congress (without conflict with fossil fuel companies) are still using innovation as a way to create illusions about climate issues. However, among those taking the climate crisis seriously, it is widely recognized that achieving ambitious global emission targets requires reducing resource consumption, actively deploying existing technologies, and actively pursuing and developing those technologies. new technology.
While there is legitimate disagreement over the proportions of how far and how fast existing and mature technologies can advance, virtually no analyst believes that America’s current innovative energy system is adequate to decarbonize the country by the middle of the century. Reform is needed.
What kind of reform Here, as in other areas of climate policy, alignment is increasing across the center-left spectrum. This is evidenced by two recent reports.
The first report (the report they call a book) was written by a team of scientists from Columbia University’s Center for Global Energy Policy (CGEP) led by energy expert Varun Sivaram. This is the first volume of a three-volume CGEP entitled “National Energy Innovation Mission”. The second was accompanied by a policy briefing and several surveys on the “Progressive Climate Innovation Agenda” from the progressive think tank Data for Progress.
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Both reports agree with the conclusion of the International Energy Agency (IEA) that “about half of the reductions needed to quickly reach zero emissions globally in the next few decades should come from technologies not currently on the market.” Some estimates are too vague, but active innovation is needed to overcome them, whether 20% or 50%.
Both reports are intended to strengthen the framework of innovative clean energy programs. And they both end up with pretty much the same policy recommendations. With a larger team and more resources, the CGEP report will inevitably be larger and more comprehensive, so most will stick with it, but the data report adds a few key elements that will be discussed below.
There are five major reforms to the innovation system that could decarbonize America by the middle of the century. It should be bigger, more targeted, more inclusive, more sustainable and more equitable. But innovative clean energy policies are also important, and we see prospects for a potential Joe Biden administration.
According to CGEP, the federal government today spends less than $9 billion a year on energy innovation. “Less than a quarter of what we invest in healthcare innovation, and less than a tenth of what we invest in defense innovation.”
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About 80% of the funds go to the Department of Energy. The rest goes to several agencies, including the USDA and NASA.
US energy research and development (R&D) spending increased after the oil crisis of the 1970s, but fell when oil prices fell and President Reagan came to power and did not recover as a percentage of US GDP.
And just as government spending on research and development “pushes” private investment out of a virtuous circle, loss of funds creates a vicious cycle. “Since 1984, private funding for energy R&D [research, design and development] and US energy patents has declined over the next 20 years,” CGEP said.
So far, private investment in clean energy has focused primarily on mature technologies in competitive markets. In 2019, only 10% of clean energy private investment was invested in innovative companies. Much of the funding for projects such as wind and solar power plants came from established market participants.
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Venture capital doesn’t grow either. “In 2019, VCs invested only $1 billion in US energy companies,” says CGEP, “in 2019, $20 billion in healthcare transactions and $70 billion in information technology companies.”
In 2015, the United States pledged to increase its spending on energy research and development to $12.8 billion by 2021 as part of its international mission on innovation agreements. This remains a multi-billion dollar shortage.
As the IEA report makes clear, even the goals of the innovation mission are woefully inadequate to the task. The United States alone accounts for about 15% of global greenhouse gases. One of the key roles in the fight against climate change must be to place enormous intellectual and engineering potential behind innovation, reducing the cost of technology that other countries must adopt as a sustainable path.
“The most important thing the United States can do to make progress on climate change is to start the National Energy Transformation Mission,” said Sivaram.
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One of the key lessons of the CGEP in the historical example of government research and development is that “the question matters.” This applies to defense and healthcare spending, which spans the entire development process from lab to market and has created, at least in part, a broad ecosystem of innovations that are self-sustaining and insulated from ongoing political interference.
“Federal support for energy innovation is not scalable, and consequently does not benefit from a thriving and self-sufficient innovation ecosystem and does not have sufficient policy autonomy to tolerate portfolio failure,” the CGEP wrote. (Imagine what the healthcare system would look like if all failed drugs were treated like Solindra.)
The first business order to build a viable innovation ecosystem is simply to spend more.
Data for Progress says, “Slightly more than triple and quadruple research and development spending.
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