The so-called ‘Super Committee’ tasked with reducing the massive US deficit is unlikely to tackle subsidies for either renewable energy or traditional fossil fuels itself, but those programmes could eventually face the budget axe, experts said.
Congress's Joint Select Committee on Deficit Reduction, a part of the legislation passed in August to end the debt ceiling crisis, must submit its proposal for reducing the deficit by between $1.2 trillion and $1.5 trillion for the 2012 to 2021 period by next Wednesday, with Congress required to vote on its recommendations by 23 December.
The Super Committee’s work has been conducted behind closed doors, but reports indicate that the group may be closing in on a broad agreement on spending cuts and increased tax revenues. However, the Super Committee would leave the specific details to the tax-writing committees of both the Senate and the House of Representatives, which would have more time to conduct a thorough examination of current tax policies, including a detailed evaluation of energy subsidies.
That may be more likely in the Super Committee context,” said Paul Bledsoe, senior advisor for the Bipartisan Policy Center in Washington, DC.
There are specific energy subsidies that are almost certain to disappear, such as the expiring blender’s tax credit for ethanol; other programmes, such as the Section 1603 Treasury cash grant programme for renewable energy installations that expires at the end of the year, are also in danger of not being extended, he said.
“The broader dynamic in Washington is that we have a $14 trillion debt and there is huge pressure on all government spending right now, which has occasioned this look at subsidies across the board, including in energy,” he said. “I think you are likely to see not a temporary but a relatively long-lasting evaluation of energy subsidies. Our group really welcomes that because we don’t believe we understand thoroughly what we’re getting for these subsidies.”
Committee should eliminate loan guarantees – TCS
The Super Committee is unlikely to tackle loan guarantee programmes for renewable energy and nuclear power, but those “harmful” programmes should be eliminated because they could cost US taxpayers millions or even billions of dollars, said Ryan Alexander, president of Taxpayers for Common Sense in Washington, DC. For example, the US government and taxpayers are already on the hook for Solyndra’s $535 million loan guarantee after the solar panel maker filed for bankruptcy. But an $8.3 billion conditional loan guarantee to Southern Company for an expansion of the Vogtle nuclear plant is also a major concern, she said.
“We think Solyndra is just a tip of the iceberg,” Alexander said. “This was not a well-designed programme and it’s putting too many taxpayer dollars at risk.”
The Super Committee may choose not to address the subsidies for renewable energy because many of those programmes are expiring and will not create major cost savings, but the programmes remain vulnerable, she said. “The champions of those subsidies will have to show what we’re getting from them,” Alexander said.
But President Barack Obama and some legislators believe it is high time to address oil and gas subsidies that have been on the books for nearly 100 years, although that idea has drawn opposition from members of both parties.
Taxpayers for Common Sense has published a list of energy subsidies it would like to see Congress eliminate such as the manufacturing tax deduction for oil and gas companies, which would save an estimated $15.9 billion over 10 years.
“There are a lot of different programmes that are ripe for the picking,” Alexander said.
US debt committee won’t confront energy subsidies – experts (Environmental Finance)
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