Today, Sen. Wyden (D-OR) spoke to the Edison Electric Institute. He said, “On energy, the guiding principles [should] be technology neutrality—that you don't favor one technology over another—and what amounts to parity.… You just distort the market if some sources get these enormous incentives and others don’t.” The senator went on to acknowledge that a goal of parity would require examining oil and gas tax incentives.1
Sen. Wyden’s comments about oil and gas tax incentives are consistent with a post on this blog of March 6, – Level Playing Fields.
The oil and gas tax incentives are permanent fixtures of the Internal Revenue Code, so they do not draw the attention that the production and investment tax credits do when they have to be renewed every few years. Nonetheless, including tax and other government benefits, the Environmental Law Institute found that, from 2002 to 2008, the United States spends almost six times as much on subsidies for fossil fuels versus renewables. 2
Energy technology parity would also mean a reduction in tax incentives for renewables. However, renewables are quickly approaching grid parity with fossil fuels, if both forms of energy must compete without tax incentives. If the tax incentives for renewables must be sacrificed to a balanced budget, the same should happen to fossil fuels. Then, let the various technologies battle it out in the free marketplace.
The above also does not reflect the fact that the fossil fuels industry has socialized the cost of carbon. Because carbon pollution contributes to lung disease, we all pay for it in terms of higher health insurance premiums and higher taxes to fund Medicare and Medicaid. If that cost is factored into fossil fuels, renewables would be the clear winner.
1 Wyden Calls for Energy Tax Reform That Could Put Oil, Gas Subsidies at Risk, BNA Daily Tax RealTime Update (March 21, 2013).
2 Section 101 (Findings) of the Sustainable Energy Act (unenacted) introduced on February 14, 2013.