With the introduction of the Senate’s version of the climate bill last week, one that called for more stringent carbon emissions reductions compared to the House Bill (a 20% reduction vs. 17% from 2005 levels), it is interesting to also note that the U.S. continues to invest significantly more in fossil fuels that it does in clean renewable energy sources.  Clean Edge points to a Environmental Law Institute and the Woodrow Wilson International Center for Study’s joint report on fossil fuel and energy subsidies for Fiscal Years 2002-2008 that reveals the government subsidized the fossil fuel industry to the tune of $72 billion over the seven year period, while subsidies for renewable energy sources equated to $29 billion (nuclear energy was not included in the study).  Furthermore, most of the fossil fuel subsidies come in the form of permanent tax breaks, while the majority of the renewable energy subsidies are written into annual energy bills, which have expiration dates and limit their long-term benefits to the renewable energy industry.

Another noteworthy finding of the study is that “the vast majority of federal subsidies for fossil fuels and renewable energy supported energy sources that emit high levels of greenhouse gases when used as fuel.” This can most likely be attributed to the fact that most of the renewable energy subsidies are focused on corn-based ethanol, an energy source that the researchers note “raises considerable questions about effects on climate.”  While much of the climate debate in Washington surrounds the current versions of the House and Senate bills clean energy bills, this study points out that the current state of the U.S. Tax Code is a significant player in how our energy production is shaped, meaning that permanent changes to the tax code could be the way to significantly influence domestic renewable energy production.  If the federal government is truly serious about a low carbon future, then they must level the playing field by offering long-term incentives that stimulate the research, development, and commercialization of a wide range of domestically produced clean energy fuels.

See “Energy Subsidies Black, Not Green” for a great graphical depiction of the energy subisdy situation in the U.S.