To Cut Wasteful Spending, Start With Energy Subsidies
Ending the government’s preferential treatment of energy technologies is the best way to ensure long-term economic and environmental sustainability.

For decades, the federal government has propped up energy sources and technologies through subsidies and tax credits. From 2010 to 2023, the cumulative cost of these policies was $76 billion and $65 billion for solar and wind power, respectively, and $33 billion for oil and gas. Nuclear energy, meanwhile, received about $26 billion.
Not only have these subsidies been costly for taxpayers, but they have also proven ineffective in changing the energy landscape. Despite receiving more than twice the amount of money as fossil fuels and nuclear power since 2010, wind and solar only generated 10.2 percent and 3.9 percent of the country's electricity in 2023, respectively.
The Inflation Reduction Act (IRA) supercharged subsidies for wind and solar energy while introducing new technology-specific tax credits for green hydrogen, nuclear power, sustainable aviation fuel, and more. Additionally, it established a $7,500 tax credit for electric vehicles (E.V.s) assembled in North America. Households earning less than $300,000 and individuals earning less than $150,000 are also eligible for the one-time clean vehicle credit.
With Elon Musk and Vivek Ramaswamy at the helm of the newly-minted Department of Government Efficiency (DOGE), the department should work with Congress to repeal energy subsidies and tax credits that distort markets and reward politically favored companies at the expense of taxpayers.
While the government's practice of picking winners and losers always comes with a steep price tag, the cost of increased energy subsidies from the IRA is exorbitant. Initially projected at $369 billion over the next 10 years, these subsidies are now expected to add over $1 trillion to the federal deficit through 2032. And, with some provisions lacking an expiration date, this figure could feasibly reach $3 trillion.
Since its enactment, the IRA has primarily benefited the wealthy and well-connected. Sixty-six percent of tax credits for residential solar panels and energy efficiency upgrades have been claimed by households with annual incomes over $100,000. Meanwhile, billions of dollars worth of solar and wind provisions have gone to companies like NextEra Energy—the world's largest utility company—and Chinese solar manufacturers.
Tax credits for E.V.s have been mostly cashed in by wealthy consumers who would have bought an electric vehicle without the credit anyway. A study by the National Bureau of Economic Research estimates that every E.V. sold because of the IRA's credit costs taxpayers $32,000.*
Not only are subsidies and credits expensive and a driver of the ballooning national debt, but they are also an inefficient way of reducing emissions. Subsidies for wind and solar energy can cost up to $260 and $2,100, respectively, for every ton of carbon dioxide (CO2) reduced. For context, reforestation and tree planting cost about $10 per ton of CO2 reduced.
The federal government's infatuation with subsidies and tax credits is the wrong way to accomplish the important goals of lowering the nation's greenhouse gas emissions and accelerating clean energy innovation. If Musk and Ramaswamy are serious about cutting the bloat of the federal budget, DOGE should work with Congress to eliminate subsidies and tax credits—especially for mature technologies—and empower the market and private sector to pick energy winners and losers.
*CORRECTION: The original version of this piece misattributed Musk's support for E.V. tax credits.
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As much as Musk may hate to admit it, E.V. tax credits must go.
He wanted them gone. General Motors and ford lobbyists wanted them.
Yeah, start with wind power and EVs. They're both just handouts to rich people.
Pass a law requiring solar panels and windmills be made without toxic chemicals.
Only GMO-free panels?
Those windmills would only Cuisinart GMO turduckens.
How about abolishing all subsidies, grants and foreign aid, or does that make too much sense?
Since the subsidies, grants and foreign aid are only possible because they were created viat statutes, passing a law to abolish them all would work - for about 10 minutes. That's about how long I figure it would take until some new special interest stepped up and got one back.
"As much as Musk may hate to admit it, E.V. tax credits must go."
See, this is what I hate, you don't do any research. Musk has repeatedly said that Tesla doesn't need the subsidy and is favor of scrapping it. He has also said, however, that the subsidies for oil & gas should also be scrapped.
Now you may think he's lying (or has ulterior motives), but that's a far cry from "hating to admit it." He seems eager to "admit it."
https://x.com/elonmusk/status/1813112958157005259
Wasn't that tweet (currently known as an X or something) published right here at Reason a few days ago (too lazy to look it up)? Do Reason writers even read Reason (wouldn't blame them if they don't)? How can libertarians speak with a single voice if our beloved Reason can't get the narrative straight?
They speek in the voice of koch
To be doubly fair though, what people often call "Oil Subsidies" are usually not actually subsidies, but tax deductions due to standard accounting practices, such as depreciation and depletion. For example, if you are sitting on an oil field and extracting the fuel out of it, you are decreasing the value of that land (because future buyers won't have a bunch of resources they can exploit). I have seen many times people claim that taking this loss in value is a "Subsidy" because it reduces taxes.
But these strategies are generally wanted by both parties because they allow you to smooth out the tax burdens- instead of infrequent windfalls of taxes and tax rebates, it is spread out over time.
Yes every business writes off expenses and if those costs ultimately payoff they pay taxes on the net profit. Been that way like forever. A legitimate deduction is not a subsidy.
Other so-called oil industry subsidies include things like federal grants for home-heating oil for the poor. I suppose greenies that hate oil would be happy to see more people freeze in the cold (which still kills more people in the US than heat).
Even this is just the tip of the iceberg. It's like the Australian pay disparity testimony where they rounded all the men putting in overtime down to one FTE, all the women working seasonal and part time up to one FTE, and declared that that the women were earning less 1 FTE to 1 FTE.
They will factor in things like 'road damage' and 'pollution cleanup' costs in as subsidies even though those actually get taxed at the pump to the consumer (or mandated to the refineries)... except for EVs... because the oil companies don't, themselves actually damage the roads or burn the gas (or assess the tax). When you point out that, empirically, the taxes can be seen in real time driving up and down demand for products, it gets waived away with "subsidies!"
These are the same people who will talk about how a 5% aluminum tariff will cast the economy back to the Dark Ages.
^THIS Exactly.
The #'s presented are completely warped.
Real studies done a decade ago was totaling $660 Billion just for Wind & Solar.
Meanwhile RFK Jr. nominated for HHS. Spoiler alert: He once said mean things about the Koch Bros.
But the IRA was awesome and not just a holdout to Democrats. I mean under it a whole 8-10 electric charging stations have been built for 8 billion dollars.
Government doesn't waste at all
Wow so I'm not a particularly mystical person but looks like Jeff Luse has somehow managed a connection through the continuum of time and space and changed the course of history,
" Trump Team To Nuke EV Tax Credit As Musk's Price-War Endgame Looms"
https://www.zerohedge.com/technology/final-chapter-musks-ev-price-war-will-be-trump-team-nuking-ev-tax-credit
Start with just how BIASED the study itself is.
“More than 90% of oil and gas subsidies quantified in this paper come from tax expenditures … The classification of each of these tax provisions as subsidies is often challenged, and we count them as subsidies in this analysis for the sake of completeness” pg 6.
This is a common leftard propaganda tactic. Pretending that across-the-board general business tax-deductions are somehow subsidies for JUST oil and gas.
Figure 5 is where information should be gotten.
Start with the alternative, PLEASE
"The Congressional Budget Office (CBO) recently announced that the 2024 fiscal-year federal budget deficit — the amount the government spent over and above what it received in total revenue — was $1.8 trillion. That makes the Biden-Harris administration by far the biggest deficit spenders in modern history."