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EIA Delays Study on Energy Subsidies Due to ‘Quality Assurance’: A Pushback Against Politically Dictated Research?

By Stephen Lacey  

"EIA Delays Study on Energy Subsidies Due to ‘Quality Assurance’: A Pushback Against Politically Dictated Research?"

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The Energy Information Administration has delayed a comprehensive analysis comparing per-MW subsidies between renewable and fossil resources.  Climate Progress has learned the delay may stem from internal concerns that the findings were far too narrow and did not give a “full picture” of the subsidy landscape.

The report, which was commissioned by three Republican House members, has come under heavy criticism for being politically driven because the requested set of data inherently inflate subsidies for renewable energy and deflate subsidies for nuclear and fossil fuels.

According to one source familiar with the EIA’s handling of the report, the study was delayed this morning during a meeting because of “quality assurance” and that the agency was re-visiting the report to ensure it gave a “full picture” and did not come to a conclusion based upon the desired results of members of Congress.

A previous EIA study looking at 2007 per-unit subsidies showed renewables getting far more government support than fossil resources: The report was requested by Senator Lamar Alexander, who has called for an end to subsidies for “big wind.” It showed that renewables received between 0.6 cents and 3.5 cents of subsidies per kilowatt-hour of electricity produced, while nuclear and fossil energies received between .02 cents and 2.9 cents per kilowatt-hour.

Opponents of clean energy pounced on the numbers, saying that they proved renewables are over-subsidized and that government funding for the industry should be significantly scaled back. But in its own analysis, the EIA cautioned about the limitations of the study:

It is important to recognize that the subsidies-per-megawatt hour calculations are a snapshot taken at a particular point in time. Some electricity sources, such as nuclear, coal, oil, and natural gas, have received varying levels of subsidies and support in the past which may have aided them in reaching their current role in electricity production. The impacts of prior subsidies, some of which may no longer be in effect, are not measured in the current analysis.

The EIA analysis simply showed that because the mature nuclear and fossil energy industries generate more units of energy, they get fewer subsidies per MWh in a given year. But by only taking a “snapshot” of a particular year, the analysis completely ignores the life-cycle subsidies for a particular technology, thus inflating the subsidy count for new renewables.

Because most renewables have zero fuel costs, the life-cycle subsidy for a wind or solar plant may be far less over time. The U.S. electrical mix is currently 45% coal; many of those plants are decades old and have already captured government incentives – but the industry may still receive billions in support through tax credits for mining and exploring for more coal. (This doesn’t even begin to account for external environmental and health costs, which add a whole new layer of “subsidy”).

Doug Koplow, an analyst who tracks government subsidies, criticized the original report when it came out in 2007:

Some of the Administration’s simplifying assumptions and definitional rules have led them to exclude very large subsidy programs and to understate the magnitude and uncertainty of some of those they have included.

Appropriate adjustments to their research scope and methods would have increased EIA’s aggregate subsidy estimates by billions of dollars per year and greatly altered the relative subsidy shares to different fuels.

Despite this major shortcoming in the 2007 report, three House members requested an update based upon the exact same parameters: “As with the previous report, the scope of the study should be limited to subsidies provided by the federal government that are energy-specific and that provide a financial benefit with an identifiable federal budget impact,” wrote Congressman Jason Chaffetz (R-UT), Congresswoman Marsha Blackburn (R-TN) and Congressman Roscoe Bartlett (R-MD).

In 2007, the EIA simply conducted a study within the narrow parameters outlined by Senator Lamar Alexander. But sources say the EIA is delaying the latest study due to concerns that it falls into the same political trap and does not adequately account for the full range of subsidies for both renewables and fossil fuels.

EIA spokesman Jonathan Cogan did not respond to questions about the reasons for delaying the report, telling Climate Progress only that “work on the report is continuing.”

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