New Study Confirms Federal Energy Incentives Have Favored Fossil Fuels Over Renewables


An updated study on federal energy incentives confirms that the main beneficiaries of more than $800 billion of federal energy incentives over the past six decades have been the oil and natural-gas industries.

According to the report, prepared by consulting firm Management Information Services Inc. (MISI), the oil and natural-gas industries together garnered 60% of federal incentives between 1950 and 2010, with 44% of the roughly $837 billion in federal support going to the oil sector.

The report shows that the oil industry has benefited from $369 billion in combined incentives, with natural gas receiving $121 billion. The study updates earlier MISI research that analyzed federal energy incentives from 1950 to 2006.

The report identifies six categories of incentives: tax policy, regulation, research and development funding, market activity, government services and disbursements.

‘Tax policy has been, by far, the most widely used form of incentive mechanism, accounting for $325 billion – 45 percent – of all federal expenditures since 1950,’ the report states. ‘The oil and gas industries, for example, receive percentage depletion and intangible drilling provisions as an incentive for exploration and development. Federal tax credits and deductions have also been utilized to encourage the use of renewable energy.’

Federally funded regulation and research and development funding, at about 20% each, are the second- and third-largest incentives.

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