Federal financial interventions, subsidies in energy markets have declined since 2013, EIA reports
The U.S. Energy Information Administration (EIA) recently updated its report on federal financial interventions and subsidies in energy markets to cover the 2016 U.S. government fiscal year (FY).
The report found that subsidies for many energy categories declined since FY 2013. Between FY 2013 and FY 2016, direct federal financial interventions and subsidies in energy markets decreased by almost half from $29.3 billion in FY 2013 to $15.0 billion in FY 2016.
The report focuses on “direct federal financial interventions by the federal government that provide financial benefits with identifiable federal budget impacts and are specifically targeted at energy markets.” Some programs that benefit energy markets were not included because they also impact markets beyond the energy industry.
The types of federal financial activities covered are direct expenditures, estimated tax expenditures, investments in research and development (R&D) and credit subsidies to recipients of federal loan guarantees.
Between FY 2013 and FY 2016, the share of tax expenditures as part of total financial interventions and subsidies increased from 44 to 59 percent. The share of direct expenditures decreased from 46 to 31 percent. This shift reflects decreasing direct expenditures for renewable electricity and increasing tax expenditures for renewable liquids fuels for transportation including biofuel production tax provisions, EIA said.
The expiry of the program that enabled Energy Investment Grants was a primary reason for the decrease in direct expenditures for renewable electricity sources, EIA noted. The application period for the temporary program has ended but outlays for some projects continued into FY 2016. Between FY 2013 and FY 2016, Energy Investment Grants decreased by $7.7 billion. Wind subsidies decreased from $6.2 billion in FY 2013 to $1.3 billion in FY 2016. Solar subsidies fell from $5.8 billion in FY 2013 to $2.2 billion in FY 2016.
Federal subsidies for fossil fuels decreased from approximately $3.9 billion in FY 2013 to $489 million in FY 2016. Support for coal slightly increased within those subsidies, while support for natural gas and petroleum liquids decreased.
The Low Income Home Energy Assistance Program (LIHEAP) subsidy was the single largest direct expenditure program in FY 2016. Funding levels were relatively stable between FY 2013 and FY 2016.
