Last week, while stumping in Nevada for Senate Majority Leader Harry Reid, President Obama urged Congress to pass $5 billion in clean energy manufacturing tax credits. The White House estimates that the $5 billion expansion would generate nearly 40,000 jobs and $12 billion or more in private sector investment, which in turn could create up to 90,000 additional jobs. While the plan seems like a solid proposal, helping create jobs and cut emissions through a tax incentive, it is sure to meet opposition amongst deficit hawks.
This will undoubtedly become part of the larger debate on the Hill over whether the government should be worried more about stimulating the economy or balancing the deficit. The discussion is an important one, but if we are to talk about tax breaks for energy companies we must do so in a forthright manner.
Any legislator that opposes tax incentives for renewable energy producers should be asked to explain why they don’t act to cut similar tax breaks for fossil fuel-based utilities. According to The Environmental Law Institute’s report, Estimating U.S. Government Subsidies to Energy Sources: 2002-2008, between 2002 and 2008 fossil fuel energy companies were entitled to 23 tax breaks, costing the government over $54 billion. That comes out to an average of $6.75 billion a year. At the same time, renewable energy received 11 tax breaks, costing the government just under $18 billion during the same time period, or around $2.25 billion a year. We will never move away from a fossil fuel economy so long as polluting technologies have a tax advantage on top of their price advantage.
As the $5 billion tax credit proposal and other forthcoming legislation comes before Congress, we must be vigilant in our attention to the Hill. Any congressman who votes against tax credits for renewable energy must answer why they did not vote for cutting fossil fuel subsidies as well. The argument that this is a spending or deficit issue is flawed, in fact, if we matched $5 billion in tax credits for clean energy with a $35 billion dollar reduction in fossil fuels subsidies, with $30 billion leftover for other energy related investments.
$5 billion in clean energy tax credits is a drop in the bucket compared to today’s fossil fuels subsidies, an industry which made over $650 billion between 2002 and 2008. At a time of economic recession our government must be wise with its spending, but that does not mean we should reject all new tax credits while defending more costly and less effective old ones. We can support clean energy tax credits without increasing federal spending, but it will take the courage to challenge the coal and oil industries.
