Largest Subsidy

Holly Fretwell
November 29, 2011

November 28, 2011

Green energy boosters like to claim that the fossil fuel industry receives the lion's share of energy subsidies. They point out things like this:

“Energy industries have enjoyed a century of federal support. From 1918 to 2009, the oil and gas industry received $446.96 billion (adjusted for inflation) in cumulative energy subsidies. Renewable energy sources received $5.93 billion (adjusted for inflation) for a much shorter period from 1994-2009. Average annual support for the oil and gas industry has been $4.86 billion (1918-2009), compared to $3.50 billion for nuclear (1947-1999) and $0.37 billion (1994-2009) for renewable energy.”

What they don’t talk about, and don’t want people to understand, is that the fossil-fuel sector gets larger dollar amounts in subsidies because they’re a far bigger part of the country's energy pie. It would be a bit like handing out a dollar bill to every person in the country, and then asking whether right-handed people would get more money than left-handers: of course they would, as a group, since there are a lot more right-handed people.

The relevant question is, which form of energy is more subsidized on a per-unit-of-energy basis. The charts below show what the subsidy situation looks like when you calculate it on the much more relevant subsidy per-kilowatt-hour basis. As you can see, on that apples-to-apples basis, wind and solar power receive far higher subsidies than conventional energy forms.