Feb 11, 2016

Get Rid of all Energy Subsidies, not Just Ethanol, Wind and Solar

Post by Derek Yale

Freedom Partners Policy Advisor Andy Koenig explains in an Investor’s Business Daily op-ed why it’s time to get rid of all energy subsidies. 

Washington politicians love giving preferential treatment to their friends, especially if they’re in the energy business. This was evident in the massive tax and spending package passed by Congress last month.

It contained a slew of large tax carve-outs for energy companies, especially those in the wind and solar industry. According to the Joint Committee on Taxation, wind and solar tax credits in the deal will cost taxpayers $26 billion over the next 10 years.

But these special-interest handouts were only the most recent. In November, the Environmental Protection Agency expanded another energy handout with even more harmful effects. It’s called the Renewable Fuel Standard, or RFS, and it requires gas and diesel fuel producers to blend a certain amount of biofuels into their product.

It’s time for Congress to end every such energy giveaway. Lawmakers should begin to systematically dismantle these tax credits, subsidies and mandates — including those for renewables and fossil fuels.

While we can’t end all these handouts without major tax reform, the RFS is a place we can start. Passed in 2005 and expanded in 2007, today it’s a solution in search of a problem.

At the time, prevailing wisdom was that we needed a reliable fuel alternative to expensive oil, which then was at an all-time high. Yet thanks to America’s own energy revolution, today’s low oil and gas prices have eliminated that concern.

In truth, the RFS is a blatant pander to the powerful corn lobby, which dominates Iowa politics. Unlike other industries that have to compete for their customers, the RFS forces Americans to buy increasingly more biofuels over time.

That’s a pretty sweet deal if you belong to the biofuels lobby — as the money it spends in Washington shows. From the 2008 through 2014 election cycles, the industry showered federal lawmakers with $10.9 million in campaign contributions.

Even that pales in comparison with the money the industry spent lobbying the federal government. From 2008 to 2014, it spent $188 million on an array of special-interest perks, including the RFS.

For the rest of Americans, however, the RFS is a raw deal. It amounts to a hidden tax that raises the cost of living on millions of families who can ill afford it.

Read the full op-ed.