TEXAS PUBLIC POLICY FOUNDATION: Big step forward on renewable energy subsidies


Texas Public Policy Foundation issued the following announcement on Feb. 2.

The Washington Post reports that the White House is pushing for a 72% reduction in spending for the Energy Department’s Office of Energy Efficiency and Renewable Energy (EERE). This would pull back funding for federal subsidies and targeted research grants and would allow states and consumers to make their own choices for energy needs. 

The report details budget document drafts from the White House. EERE spending would be reduced from $2.04B to $575.5M and suggests cuts in headcount, research funding, and state energy grants. 

The scale back in renewable assistance has been in the works for almost a decade. The solar SunShot program is run by the EERE. In 2011, the SunShot Initiative was created to “reduce the total costs of solar energy by 75 percent, making it cost competitive at large scale with other forms of energy without subsidies by the end of the decade.” Six years later in 2017, “the Energy Department announced that the SunShot Initiative successfully met the utility-scale solar cost target of $0.06 per kilowatt hour three years earlier than expected.” (Emphasis added in bold) 

Some might question this claim, but by EERE’s own standards, solar should now be competitive at large scale without subsidies. This program was in the works in anticipation of a scale-back in renewable funding. Now that time has come. The White House’s official budget recommendation will be released this month. 

The Washington Post article quotes a source who says that the spending cuts “may have been lowered further because of a desire to channel more funding toward nuclear energy.” But as mentioned in a previous post, the government isn’t good at picking winners and losers. We shouldn’t reduce renewable subsidies then turn around and give the money to nuclear – or coal. 

If we remove excessive regulations, innovation can accomplish what the EERE has been trying to do. Nuclear innovation is improving safety and competitiveness, despite its renewable competitors receiving about 50x more tax incentives than nuclear according to the Congressional Research Service, Congress’s non-partisan research arm. Other research shows that the switch to natural gas generation away from coal, driven by market economics and the use of fracking, has decreased U.S. CO2 emissions more than wind and solar combined. The market is trying to adapt to changes in supply and demand through innovation and ingenuity. 

Eliminating subsidies will create a more competitive landscape that will, in turn, drive innovation and respond to consumer needs more quickly. The EERE cuts are a big step forward. Time will tell if the U.S. will then take two steps back.

Original source can be found here.

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