U.S. Energy Subsidies: Effects on Energy Markets and Carbon Dioxide Emissions

In order to examine the effects of U.S. government subsidies on energy markets, Subsidyscope commissioned Maura Allaire and Stephen Brown (formerly with Resources for the Future) to use a model to investigate the impact of both spending programs and tax provisions on energy markets and CO2 emissions from 2005 through 2009. This paper, “U.S. Energy Subsidies: Effects on Energy Markets and Carbon Dioxide Emissions,” finds that over this period, the U.S. government spent $96.3 billion on about 60 different subsidies that were directed at increasing energy production, subsidizing energy consumption, and increasing energy efficiency. From 2005 through 2009, the U.S. shifted its spending on energy subsidies away from those that increased CO2 emissions towards those that reduce CO2 emissions. If the energy-related subsidies that increased CO2 emissions had been eliminated, U.S. government expenditures would have been an average of $12 billion less per year and U.S. energy-related CO2 emissions would have been, on average, 1.0 percent lower over the 2005-2009 period.

The paper makes no recommendations and its purpose is to inform the public debate. Subsidyscope has no position on this issue. Click here for the full paper.