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US Green Energy Subsidies ‘Unfair and Ineffective’, Study Finds | The Global Warming Policy Forum (GWPF)

August 28, 2015

A University of California study has slammed the fairness, efficiency and effectiveness of billions of dollars of so-called green energy subsidies provided by the US government.

The US federal government has paid $US18.1 billion in tax credits since 2006 aimed at encouraging American households to install energy-efficient windows, air conditioning schemes, rooftop solar in their homes and buy electric and other hybrid vehicles.

The study has found the bottom 60 per cent US households by income received about 10 per cent of the value of the four main ‘green energy’ tax credits available, while the top 20 per cent (those with annual incomes above $US75,000) extracted 60 per cent of the benefit.

“The most extreme [example] is the program aimed at electric vehicles, where the top income quintile received about 90 per cent of all credits,” concluded Severin Borenstien and Lucas Davis, from the University of California, Berkeley.

The biggest credit, the Non-Business Energy Property Credit, permits non-refundable tax credits of up to $US1500 and has cost $US13.7 billion since 2006.

“While there may well be political or other rationales to prefer this approach, it would seem to be difficult argue for these policies on distributional grounds,” the professors said.

The Alternative Motor Vehicle Credit permits tax credits up to $US4000 for purchase of eligible hybrid vehicles has cost $550 million since introduced in 2006. Households earning more than $US200,000 a year enjoyed 11 per cent of this credit and 35 per cent of the benefit of a similar Electric and Plug-In Hybrid Vehicles credit, which has cost $US346 million.

“We were struck by the horizontal inequity of these programs,” the study said, referring to the inability of people without tax liabilities to enjoy any benefit.

Their study The Distributional Effects of US Clean Energy Tax Credits found installations of energy efficient household items had soared but couldn’t conclude the credits were responsible. “If credits do no induce additional sales, then the primary effect is just to transfer rents to participants in transactions that would have taken place anyway,” they said.

“A growing body of evidence has shown that these policies are considerably less efficient than first-best policies,” they said. “There is wide agreement among economists that the best policy to reduce greenhouse gas emissions and other negative externalities from energy use would be to use a tax or cap-and-trade program,” the Berkeley economists said, noting that 65 per cent of global CO2-equivalent emissions came not from households but from business use of power.

One of the major concerns in the UK about solar subsidies, is that are transferring money from electricity bill payers, many of them poor, and handing it over to people with large houses and the money to afford solar panels.

  1. August 28, 2015 1:49 pm

    Reblogged this on WeatherAction News and commented:
    Wealth distribution…just not to the poorest.

  2. August 28, 2015 1:55 pm

    Apparently the wizards of UC Berkeley in an attempt to preserve their jobs, their grants, their life-style, and even their lives, think no one will really notice the statement: “There is wide agreement among economists that the best policy to reduce greenhouse gas emissions and other negative externalities from energy use would be to use a tax or cap-and-trade program,” Right there it is thrown back on the very consumers they were wringing their hands over in previous statements. I seriously doubt that economists such as Dr. Thomas Sowell or Dr. Walter E. Williams share the statement of consensus concerning economists’ “agreement”.

  3. August 28, 2015 2:58 pm

    One more reason to call “Climate Change” a scam.

  4. August 28, 2015 3:27 pm

    O/T – Julia explains our rotten summer (actually quite fine in South bar a wet last 5 weeks)

    I’ve dropped a comment (awaiting moderation), but have a read and then read the JJA summary for policy makers. I see lots of contradictions (and yet again a bad forecast which they gloss over as usual – see MetO blog post). Cake and eat it comes to mind.

    Then read this summer forecast from April – no multi million super computer required.

  5. Tom O permalink
    August 28, 2015 6:38 pm

    To my knowledge, it has sort of been acknowledged that “climate crisis” has turned itself into a trillion dollar industry. It’s a lot like any other “scare based” industry, such as identity theft and computer viruses. When you have scared people enough, money pours in. Since there has been no warming for nearly 2 decades, there has been no proof that you need a “cap and trade scam” to fight “greenhouse gases.” Yes, I chose the correct word. It will not surprise me to still hear the cry of “climate crisis causing weather weirding, all because of fossil fuel usage” when there is a 100 foot layer of ice sitting over Chicago in August.

  6. August 28, 2015 8:37 pm

    We live in a strange, delusional time with world leaders trying to hide their powerlessness from public:

  7. Bloke down the pub permalink
    August 29, 2015 7:29 am

    No wonder renewables are so expensive if they have sunbathing platforms on top of wind turbines.

  8. September 6, 2015 8:12 pm

    Reblogged this on Climate Collections.

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