We recently hosted nationally recognized energy finance expert Richard Caperton for our ongoing Scaling Green's Communicating Energy lecture series. We’ve posted the curtain raiser on this series of posts about Caperton’s remarks on Master Limited Partnerships (MLPs), and their advantages and disadvantages relative to wind energy’s Production Tax Credit and solar's Investment Tax Credit.
Fossil fuel-rented cleantech deniers in Congress decry how the Obama Administration has been “picking winners and losers.” But when you come down from Fox News Mountain and live in the real world, the U.S. energy playing field is tilted grossly towards fossil fuels and against clean energy. Look no further than MLPs, the advantageous tax structure enjoyed now only by the highly profitable oil and gas industry. Caperton is helping drive an effort to get MLPs open to clean energy. You know, to stop “picking winners and losers.”
But, we asked him, do we even know all the ways that U.S. taxpayers support dirty energy with their politician-diverted tax dollars? In short, “no”:
There are the things that are easy to track - the tax benefits - and even those are a little bit hard...MLP treatment for fossil fuels costs us $1.5 billion a year. The advantages of things like liability caps on nuclear plants from the Price-Anderson is extremely hard to quantify and we don't have any idea what that costs us or what the value is to people who benefit...So it's not a small number, that's a lot of money we're giving away to these people, and only giving it to them. And there's no inherent reason that it should only be for fossil fuels. It just makes perfect sense to make it work for all the energy sectors.
Highlighting the unfairness, Caperton points out: "The oil companies have a liability cap on how much they owe when they have a spill or some sort of disaster. They can only be forced to pay up to $75 million for the damages." I asked the obvious question, "And who pays for the rest of the cleanup?" The answer: "The taxpayers." It's infuriating. But wait – as Caperton explains, it gets worse.
So let's be clear. The biggest thing that we have that gives an unfair advantage to fossil fuels is not pricing their emissions. They get to spew pollution into the air that hurts all of us, and they don't pay anything for it. We pay for it, through our hospital bills. But they don't pay for it. If we don't do anything for that, we're never having a level playing field. Now, if we do price the carbon, then we should think about all the other tax incentives...fossil fuels still get billions and billions of dollars in tax advantages every single year, and they'd also need to be gotten rid of.
Putting aside pollution and other "externalities" for a moment, has anyone conducted a comprehensive inventory of all the monetizable support we provide to fossil fuel industry? Here's Caperton:
Yes and no. Some people have done a very, very good job with it, but not in the last few years. There's a venture capital firm out of the Bay Area [which] did a report called "What Would Jefferson Do" that looked at historic spending in the fossil fuel sector and the nuclear sector and renewables sector, splitting out ethanol from renewable power like wind and solar. They found that fossil fuels had gotten...$80 of support for every $1 that renewables had gotten.
It should go without saying that an 80:1 advantage for fossil fuels - or even a 2:1 advantage, for that matter - is not a level playing field. And, it’s not what taxpayers want their money spent on, either. Yet the coddled, at-the-federal-taxpayer-trough fossil fuel industry still pushes the nonsense that it's clean energy that can only survive with subsidies. And they make this claim even as the unsubsidized, levelized cost of energy indicates that energy efficiency, wind and solar are already competitive with fossil fuels. From a tactical standpoint, you have to give the fossil fuel lobby credit for driving message discipline to a serious advantage: not one dirty energy subsidy has been cut or removed to date. Not one.