NCPA - National Center for Policy Analysis

Taxpayers Can't Verify the Success of Alternative-Energy Incentives

June 3, 2013

The U.S. federal government has been encouraging alternative energy through tax credit and subsidies to try and pull the private sector off of fossil fuels. Not only does the federal government give subsidies and incentives to companies, so do the states. As a result, Americans have no idea how much taxpayers and consumers, through higher energy bills, are spending to subsidize all of those green energy projects, says Merrill Matthews, a resident scholar with the Institute for Policy Innovation.

  • Currently at the federal level, a 2012 paper from the Washington-based Brookings Institution estimates that federal spending on "clean energy technology," which includes nuclear, could hit $150 billion from 2009 through 2014. Averaging out to be around $30 billion a year.
  • President Obama's 2014 budget includes $2.8 billion for the Office for Energy Efficiency and Renewable Energy and $28.4 billion for the Department of Energy to be spent on various projects.

But there's more, as state and local governments have created thousands of green and renewable energy programs.

  • There are 1,124 state, territorial and local financial incentive programs for renewable energy (all numbers exclude a small number of listed federal programs).
  • The programs do not seem to follow the usual red state-blue state patterns. While no one would be surprised that California is toward the top of the list for renewable rebate programs (56), Minnesota has the most (76). But red state Indiana has 34 and Texas 29, while blue state Vermont has only one and Connecticut four.
  • 1,442 state, territorial and local financial programs encourage energy efficiency, including 1,137 rebate programs and 222 grant programs.

However, no one seems to know how much state and local governments spend on these programs. Complicating the cost estimate is the fact that while many are funded with tax dollars, others are funded by overcharging consumers (i.e., ratepayers) on their utility bills. California's Legislative Analyst's Office released a paper in December that claims, "Over the past 10 to 15 years, the state has spent a combined total of roughly $15 billion on such efforts [energy efficiency and alternative energy], the vast majority of which has been funded by utility ratepayers."

While some of the green energy programs may be well worth the money, it's hard to know because most taxpayers have no idea how much they're spending. State legislators should press for those answers. We may be surprised at how much we spend for how little we receive.

Source: Merrill Matthews, "It's Time We Learn What Green Energy Costs States and Cities," Dallas Morning News, May 27, 2013.


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