Report: Cut energy subsidies to trim deficit

With federal sequestration triggering a fierce debate over what government programs should be cut, a fiscal watchdog group proposes putting energy subsidies on the chopping block.

Unless Congress reaches a deal, there will be automatic across-the-board spending cuts.

“Sequestration is bad. It is irresponsible. It would cut the best and the worst the government has to offer without distinction,” Taxpayers for Common Sense president Ryan Alexander said in a statement.

“And no amount of finger pointing can change the fact that both Congress and the President are responsible for this threat,” she continued.

TCS put together a list of programs that should be cut because they are “an inefficient, ineffective, or wasteful use of taxpayer dollars” and can be safely eliminated, including a wide range of energy subsidies.

In total, TCS identified $2 trillion in cuts that would the federal deficit and “reflect the values of effectiveness and efficiency in managing taxpayer dollars.”

Cutting energy subsidies including to sources like alternative energy, biofuels, coal, nuclear power, oil, natural gas, as well as cutting research and development funding, would save taxpayers $12.8 billion in 2013, and $123 billion over ten years.

In terms of alternative energy subsidies, cutting the the tax credit for clean-fuel burning vehicles would save $6 billion over ten years, and cutting the tax credit for alternative fuel mixtures would save $2 billion over a decade as well.

“[M]any of these technologies aren’t market-ready, may not perform better than existing technologies, or simply act as a new way to funnel taxpayer money to old, established energy interests,” according to TCS.

In terms of cutting biofuel subsidies, getting rid of the tax credits for volumetric biodiesel and for renewable biodiesel would save a whopping $16.2 billion over a decade and $1.1 billion next year alone.

“This mature industry is now producing tens of billions of gallons of ethanol every year so it’s time for taxpayer support to stop,” according to TCS. “While the ethanol tariff and tax credit expired at the end of 2011, corn ethanol, other biofuels, and biomass used to produce electricity are still benefiting from other wasteful subsidies.”

Getting rid of the deduction that domestic manufacturers get for hard mineral fossil fuels would save $2.5 billion over ten years, and axing a subsidy for nuclear fusion energy would save taxpayers $5.1 billion over the same period.

Ending the manufacturing tax deduction for oil and gas companies would yield savings of $17.2 billion over ten years, according to TCS.

Cutting certain research and development programs would also yield savings, including $6 billion over a decade after eliminating Department of Energy funding for “Biomass and Biorefinery R&D.”

“The government spends billions every year doing research that should be done by private industry,” writes TCS. “Taxpayers should and do pay for basic research into the most nascent and least understood energy technologies, but these mature industries should pay for the research from which they will ultimately benefit.”

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