2. What is a Subsidy?
A subsidy is a benefit given by the government to
groups or individuals usually several forms:
cash payment (Direct spending)
Tax reductions
The energy industry in particular heavily
regulated/subsidized by government
The Government spends around $9-13 billion annually
on civilian energy research and subsidies (increase in
last 10 years)
3. Types of Subsidies
1. Subsidies that increase revenue (Tax breaks)
2. Subsidies that lower the cost of production (Direct
Spending lowers fixed costs)
3. Subsidies that are not linked to production or input
(Wage boosts and research grants etc.)
4. Why Do We Have Them?
• Stabilization of the economy
• Government Fiscal Policy
• Largely Democratic support
• More affordable service (notice
price difference when subsidy
introduced)
Solar EnergySolar
5. Special Treatment for Solar?
Solar is not the only subsidized industry
in the energy sector
Compared to fossil fuels solar receives
1/6th of the funding/tax breaks
Meant to stabilize the economy
Compare to the ‘07-’08 bailouts
6. How Are They Distributed?
Anti-fossil fuels
edition
7. Now a pro-fossil fuels chart…
Source: congressional tax budget
Notice how here subsidies for fossil
fuels is $22,500,000 vs. $70,200,000
in previous slide
8. What is Happening?
Data manipulation
Who benefits?
Political influence, corporate pressure, public
pressure
Every country is different (see Saudi Arabia
later)
9. Political Influences on Subsidies
Democratic policy VS. Republican policy
Left: wants more government intervention. They support more subsidies and
like the government to control the economy as best it can.
Right: wants less government intervention and believes in a free market theory
with laissez-faire economics. They believe that generally subsidies are an unfair
advantage provided to industries that can not stand on their own.
*Upcoming election key
10. Solar ITC Option and Why You Should
Care
Scheduled to run out in 2016, was extended by congress (30%)
If allowed to run out, Bloomberg projects a ripple effect that would crush
the energy sector (Bad timing with Oil’s current state)
Estimates a drop in Solar projects up to 70%, loss of around 100,000 jobs
New extension runs through 2022 when the industry will have advanced to
sustainable levels
11. Not the Only Option…
Gov’t is not the only entity with money
1. Private investors
2. Financial intermediaries
Subsidies may not be needed much past
2022
Improving technology of cells
12. Solar Subsidies Today
Industry is stable thanks to Congress’
extension of the ITC
Direct Government spending has been
steadily increasing under Obama’s terms
however this could shift
Nevada an example of what could go wrong
if we reverse this in the future (solar has left
state)
13. Saudi Arabia
Cutting spending on all alternative energy sectors
Attempt to combat drop in oil’s value over last year
Long-term effects
14. Thank-you – Questions?
Citations
The Conservative Case for Solar Subsidies - The New York Times. (n.d.). Retrieved from
http://www.nytimes.com/2016/01/05/opinion/the-conservative-case-for-solar-subsidies.html?_r=0
Subsidy Definition – Investopedia. (n.d.) Retrieved from http://www.investopedia.com/terms/s/subsidy.asp
Frishberg, Manny. Research Technology Management. 2nd ed. Vol. 57. Industrial Research Institute, 2014. Print.
Lacey, Stephen. "Congress Passes Tax Credits for Solar and Wind: ‘Sausage-Making at Its Most Intense’." Web. 15
Mar. 2016.
"Congress Extends the Renewable Investment Tax Credit: What Now." GreenBiz. Web. 15 Mar. 2016.
"Energy Subsidies." Downsizing the Federal Government. Web. 22 Mar. 2016.
