U.S. FEDERAL RENEWABLE SUBSIDIES ARE DRIVING THE ENERGY TRANSITION

Bill Peacock

Key Points

• Exaggerated Fossil Fuel Subsidy Claims: Critics of fossil fuel subsidies often overstate their size, while subsidies for renewable energy are significantly larger.

• Rapid Growth of Renewable Subsidies: Federal support for renewables has soared from $74 billion (2010-2019) to an expected $244 billion (2020-2029), driving the energy transition.

• Inflation Reduction Act’s Impact: The Inflation Reduction Act has drastically increased projected subsidies for wind and solar energy from $66 billion to $174.8 billion for 2023-2029.

• Grid Reliability Issues: The shift to renewable energy has compromised the reliability of the U.S. electric grid, as seen in incidents like Texas’s Winter Storm Uri.

• Rising Economic Costs: The transition to renewables is driving up electricity prices, with California and Texas experiencing significant cost increases.

Executive Summary

U.S. federal subsidies for renewable energy are accelerating the transition from fossil fuels to renewables, resulting in higher costs and increased grid unreliability. Renewable subsidies, which have surged in recent years, are cited as the key factor behind the commercial success of wind and solar energy. This shift distorts the energy market and undermines the reliability of the U.S. electric grid. Lawmakers should eliminate all energy subsidies to allow market forces to determine the energy mix.