Green Subsidies Have Close to Zero Effect on Emissions


Credit: Timo Newton-Syms/wikimedia

A study conducted over two years by the National Research Council has concluded that subsidies for green energy have had close to zero effect in reducing US greenhouse gas emissions.

From Fox News:

After a survey of expert literature on the tax and subsidy topic, coupled with extensive customized computer modeling work, the study declared that "their combined impact is less than 1 percent of total U.S. emissions" over the next 25 years, and they are a lousy bargain to boot:  "Very little if any GHG reductions are achieved at substantial cost with these provisions."

So much so, in fact, that the study concluded "current tax expenditures and subsidies are a poor tool for reducing greenhouse gases and achieving climate-change objectives."  They "achieve small reductions in GHG emissions and are costly per unit of emissions reduction."The full cost was something the study was unable to make entirely clear.

It estimated that the federal government had spent some $48 billion in just the past two years on "tax expenditures"-meaning subsidies, credits, and other incentives—related to the energy sector, and also noted that few were specifically enacted to reduce greenhouse gases.

The report highlighted the unintended consequences of the incentives given to the biofuels sector. Professor of economics at Yale, William D. Nordhaus, who chaired the committee responsible for the report, said, "tax credits for biofuels encouraged the consumption of motor fuels because they lower prices, and this effect appears to offset any reduction in the GHG intensity of motor fuels that occurs because of the incentives to blend biofuels with gasoline."

Last month, President Obama gave a major speech on the issue of climate change, unveiling a raft of new measures to reduce greenhouse gas emissions. The speech was hailed by Al Gore as "a terrific and historic speech, by far the best address on climate by any president ever." The plan includes limiting the amount of carbon that can be emitted from power plants and a gargantuan increase in funding for clean energy technology of $7.9 billion. There is as yet no compelling reason to assume this massive increase in spending will be any more successful in finding an efficient green alternative to fossil fuels than the past several years of failure. 

Since subsidizing failing projects and burning taxpayers' money has become the raison d'etre of the Obama administration, don't expect any reconsideration of policy after this report.