Intelligent Energy

Oil, wind subsidies on the chopping block in U.S.

Posting in Energy

Competing budget priorities and political sparring in Washington have placed subsidies for fossil fuels and wind energy on the chopping block.

President Obama's budget shifts billions away from fossil fuels over the next ten years.

Election year posturing in Washington has the parties locked into competing energy policy priorities with President Obama favoring a multi-billion dollar reduction in oil subsidies and Congressional Republicans content to allow wind energy tax credits expire.

The Presidential budget request, while not the actual U.S. budget, is required by law and outlines the administration's spending requests to persuade Congress to act. President Obama's Fiscal Year 2013 budget outlines a ten-year plan to achieve greater energy independence.

Obama would shift monies from fossil fuels to support renewable energy and conservation programs. The budget proposes cutting more than US$40 billion in oil, coal, and natural gas subsidies. Funds would transfer to raise alternative energy and energy efficiency spending by 25 percent.

Department of Energy research to discover safer ways to obtain natural gas from shale formations would receive more support. Other focus areas include carbon capture, pipeline safety, and more funding for nuclear safety.

The President called for an "all of the above" approach to domestic energy production in his annual State of the Union address that included expanded natural gas production and offshore oil drilling.

"We need to reduce our dependence on foreign oil by ending the subsidies for oil companies and doubling down on clean energy that generates jobs and strengthens our security," the President told a crowd at Northern Virginia Community College in Annandale, Virginia. Several environmental groups applauded the President.

But the American Petroleum Institute was perturbed by the President's proposal, telling reporters on a call afterward, “The president’s 2013 budget plan returns to the well of bad ideas and back tracks on his State of the Union commitment."

Congressional Republicans are far liklier to ally with fossil fuel producers and are adverse to renewing renewable energy subsidies. An effort to extend an income tax credit for wind energy failed yesterday in Congress, leaving the industry bracing for job losses after a boom period.

The American Wind Energy Association (AWEA) found that slightly over 6,810 megawatts (MW) were installed domestically in 2011, an increase of 31 percent for the year. 8,300 MW are under construction this year, it says.

"The stakes here could not be clearer. Economic studies have shown that Congressional inaction on the PTC will kill 37,000 American jobs, shutter plants and cancel billions of dollars in private investment," AWEA CEO Denise Bode said in a statement.

"Congress needs to understand that, with PTC uncertainty, layoffs have already begun and further job losses and even plant closings will accelerate with each month we near expiration in December."

(Image credit: Whitehouse.gov)

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David Worthington

Contributing Editor

David Worthington has written for BetaNews, eWeek, PC World, Technologizer and ZDNet. Formerly, he was a senior editor at SD Times. He holds a business degree from Temple University. He is based in New York. Follow him on Twitter. Disclosure