News Story

Renewables Get Far More Federal Subsidies Than Coal

Taxpayers paid $3.5 billion to wind and solar, $1.26 billion to coal

Coal may not be the politically correct choice of energy for progressive activists, but recent U.S. government data challenges one part of the anti-coal narrative, which is that the coal industry is heavily subsidized by taxpayers.

Coal does get federal subsidies, according to a government report, but far less than wind and solar. Coal received $1.26 billion in federal subsidies in 2016. Renewable energy interests, in contrast, received $6.7 billion. That amount included $1.27 billion for wind producers and $2.23 billion for solar power interests.

The figures come from the U.S. Energy Information Administration’s report on 2016 federal subsidies. “Subsidy” is defined in the report as direct payments, tax breaks, loan subsidies, and research and development assistance.

Yet despite receiving less taxpayer support than wind or solar, coal far outpaced them for electricity production in 2016. Coal provided 29.6% of the electricity generated in the United States that year, compared to 6.6% for wind and solar combined.

A 2018 study by the EIA found that in 2016, coal received 8% of direct federal subsidies and produced about 30% of the electricity we use. “Direct subsidy” means a cash outlay or its equivalent from the government.

Nuclear power producers received 2% of direct federal subsidies and produced about 20% of the nation’s electricity. Natural gas-fired generators provided 35% of the electricity we use, and the companies that produced it received a direct subsidy of -5%, meaning they paid more in taxes and royalties than any amounts they received directly.

Renewables, a category that includes biomass, geothermal, hydroelectric, wind and solar, received 45% of federal energy subsidies while producing 15% of U.S. electricity (mostly with hydropower).

Jason Hayes, director of environmental policy for the Mackinac Center for Policy, pointed to the solar company Suniva, which received direct subsidies, including three federal grants worth $8.8 million from 2014 to 2016. It also received an earlier $5.7 million tax credit to develop and produce solar cells and accompanying technologies in Michigan.

Hayes said he believes subsidies should be eliminated for renewables and fossil fuel research alike.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.