Renewable energy subsidies decline 56%

Federal subsidies for renewable energy, including biofuels for transportation and renewable generation of electricity, fell 56% to $6.7 billion in fiscal year 2016, from fiscal year 2013, according to the U.S. Energy Information Administration. Subsidies in fiscal years 2010 and 2013 were about $15 billion, more than twice the 2016 level as support decreased from the American Recovery and Reinvestment Act of 2009.

In fiscal year 2016, renewable energy received 46% of federal energy subsidies. EIA defines subsidies as money a government spends, or revenue it foregoes, to encourage or support certain activities. Following are the subsidies: direct expenditures, tax expenditures, research and development and credit subsidies to recipients of federal loan guarantees.

In fiscal year 2016, 80% of renewable subsidies were tax expenditures. More than half of the $5.6 billion in renewable tax expenditures went to biofuels, according to the EIA. In fiscal year 2010, 77% of tax expenditures went to biofuels, but in fiscal year 2013, biofuels accounted for 31% of the expenditures, after the expiration of the Volumetric Ethanol Excise Tax Credit at the end of 2011. Between fiscal years 2013 and 2016, biofuels tax expenditures rose 58.8% to $2.7 billion as a result of the $1 per gallon biodiesel blenders tax credit. Biofuels demand rose as the United States worked to meet targets set in the Renewable Fuel Standard, which required blending of biofuels into the U.S. fuel supply.

Tax expenditures for renewable electricity accounted for almost 70% renewable electricity subsidies in fiscal year 2013, but in fiscal year 2016, the subsidies were nearly cut in half, according to the EIA. The majority of the subsidies went to commercial wind and solar projects from the Production Tax Credit and the Investment Tax Credit. In 2016, the PTC provided a tax credit of 2.4 cents per kilowatt hour, and the ITC allowed for a 30% deduction for project construction costs. In fiscal year 2016, the PTC and ITC provided tax credits of $1.4 billion and $1.2 billion, respectively.

Almost all direct expenditures for renewable energy for fiscal years 2010, 2013 and 2016, were the result of the American Recovery and Reinvestment Act of 2009, or the federal stimulus funding. Since 2009, the Department of Energy has invested more than $31 billion because of the funding. A lot of the funding went to renewable energy projects, but as of fiscal year 2016, funding fell 90% to about $1 billion, from fiscal year 2013.

Research and development expenditures were about $850 million for fiscal years 2010 and 2013. By fiscal year 2016, the spending declined 47.1% to $450 million. In fiscal year 2010, $296 million in federal loan guarantees were given, but none were handed out in fiscal years 2013 and 2016.