A brief look at the costs of sustainable energy development

As a researcher entrenched in an academic setting my career and academic future depends on funding that largely comes from the government (National Science Foundation in particular). With renewed budget talks on the horizon I am sure further cuts in research funding will be discussed and put on the table. The problem is that most politicians and citizens do not have a real understanding of how research money is spent or what the benefits are. As an example let us take research and development funding for sustainable energy. This is often a point climate change opponents bring up to argue against using government dollars to develop green energy.

According to this congressional budget office document, in 2011 the Department of Energy (DOE) had a total budget of $24 billion, with only $3.5 billion of that dedicated to direct investment of research and development of sustainable energy technologies. The remaining $20.5 billion goes to tax incentives to improve energy efficiency and encourage investment into sustainable energy programs.

Let’s focus first on direct r&d investment. Opponents to sustainable energy argue that the government should not support new technology investment because the free market will dictate where investment occurs. However, a look at the past DOE budget shows that heavy investments have been made in fossil fuel technologies since the 1980s with only a recent switch (2006) to sustainable energy. In fact, when adjusted to today’s dollar value the DOE spends less on sustainable energy technology investment today than it did for fossil fuels throughout the 80s and most of the 90s. Also let’s remember that DOE has funded and continues to fund fossil fuel development since 1980 with sustainable energy money only recently seeing a large increase in investment.DOE graph

On the other hand, tax incentives are higher now than they were during the 80s and 90s with the majority of that money going to sustainable technologies. However, with the current emphasis on energy efficiency and sustainable energy one could argue that this program is a relative bargain. For example, a National Academies of Sciences Report estimated that air and water pollution resulting from energy production and transportation, which is overwhelmingly fossil fuel based, cost the US $120 billion in health and environmental related damages in 2005. If we spend even a fraction of the overall DOE annual budget on improving our air and water quality by using cleaner energy we could potentially save billions of dollars in the long run by improving our health and environment.

Energy-Related Tax Preferences, by Type of Fuel or TechnologyIf we look at federal money spent across the entire government then the disparity between fossil fuel and sustainable energy spending becomes more apparent. Priceofoil.org estimates that the fossil fuel industry received approximately $53 billion in total funding last year (subsidies, tax breaks, direct government funding, etc.) while sustainable energies received just $15 billion. When we incorporate the environmental and health costs of fossil fuel based energy I would argue that we are greatly underfunding sustainable energy programs. It will take some time before sustainable energies can meet our growing energy demand but in the long run we will all be better by switching to cleaner and more efficient energy sources.


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