The Magazine

Go Green . . .

By cutting government.

Sep 12, 2011, Vol. 16, No. 48 • By ELI LEHRER & BEN SCHREIBER
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But the subsidies go much further. In fact, conventional fossil fuels, the sources of energy that tend to produce the greatest carbon emissions and most asthma-attack and lung-cancer-causing particulate pollution, receive even more largess than ethanol. More than $8 billion in Department of Energy loan guarantees for coal plants (many of which would be built anyway with private investor funding) provide enormous taxpayer support for the dirtiest of all widely used fuels. Oil interests—subsidized mainly via huge tax benefits like an “intangible drilling cost” tax advantage that reduces Treasury revenue by almost $20 billion a decade—also get big subsidies. One example: a half-billion dollars that the government will pay this year alone to support fossil fuel research efforts that profitable energy companies could easily finance on their own.

But even some programs with undeniable green bona fides, like tax credits for people who purchase fuel-efficient hybrid cars, have ended up having dubious environmental benefits. Although the hybrid tax credit very likely accelerated the purchase of early, fuel-efficient cars like the Toyota Prius and Ford Fusion, the program’s insistence on withdrawing eligibility from the companies that sold the most hybrids meant the program eventually became a subsidy for companies that were late to the game. In 2010, $200 million of tax credits went mostly to people who bought less efficient cars from companies like GM and BMW, creating a government tax break for cars that used more gas than models that were no longer eligible. 

In fact, many of the dated, silly programs that good government watchdogs often cite as egregious examples of waste are equally destructive to the environment. Direct subsidies to commodity crop growers (roughly $12.5 billion a year) lead to cultivation of land that would otherwise be wild and subsidize environmentally harmful agricultural practices. Payments to airlines that fly to small “essential air service” airports (about $180 million a year) lead to wasted fuel, encourage inefficient travel, and don’t even save much time for travelers. 

Some policies actually pay businesses to exploit publicly owned resources. For example, royalties charged to timber and paper companies that log National Forests don’t even cover the cost of the federally funded road building and other services those companies receive. Similarly, programs that lease grazing land to ranchers net about $120 million a year in losses for taxpayers. Federal hard rock mining laws, likewise, give away valuable minerals found on public lands for free and allow companies to claim public land for less than $5 an acre. While it’s possible to disagree as to what should be done about these programs—there are cases for selling certain lands outright at market prices, raising the royalty fees in others, and banning all exploitation in others—it is clear that the current royalty structure for the use of federal resources amounts to a straightforward subsidy for big business.

Extreme voices that favor abolishing every environmental law under the sun are missing the point. While our organizations do not always agree on what is a pollutant, we can agree that laws should require polluters to pay for the costs they impose on -others. There is also clearly a role for government in paying for basic research to improve understanding of fundamental scientific principles—as opposed to the product development ventures the Bush and Obama administrations have funded lavishly—because that function has never been widely performed in modern times without public sector support. Government should also maintain parks, refuges, and wilderness areas. 

But many subsidies for energy, agriculture, transportation, land development, and research result in far more environmental harm than good. Cutting waste while protecting the environment: It’s one of the rare propositions these days on which both the right and left can agree.

Eli Lehrer is vice president of the Heartland Institute. Ben Schreiber is a climate and energy tax analyst at Friends of the Earth.

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