Thoughts on the Green Scissors Report

The most recent Green Scissors report is out, recommending hundreds of billions of dollars in subsidies that could be cut to reduce the budget deficit and improve our environment.  Green Scissors provides a host of useful proposals to save tens of billions of dollars annually by eliminating unnecessary, environmentally harmful subsidies, including conventional fossil fuel subsidies and VEETC (i.e. the ethanol tax credit), reforming inefficient and expensive agriculture policies and farm subsidies, and reclaiming unclaimed royalties from mining public lands.  These counterproductive programs and subsides are outdated and wasteful and should be first on the chopping block when Congress returns to debate the next phase of deficit reductions.

We fully recognize and support the idea that there are myriad inefficient and expensive subsidies that exist for mature energy technologies, especially fossil and nuclear.  However, select incentives can be critical in helping new technologies overcome the plethora of energy market failures and barriers stifling their deployment.  A couple of older NRDC briefs (here and here) still stand up in outlining this perspective and delineating the differences between good incentives and bad subsidies.  As one example, we can invest tax dollars in creating jobs and building new industries by targeting the research funding of the Advanced Research Projects Agency–Energy (ARPA-E) towards energy alternatives that can end our addiction to oil and other fossil fuels, and bring new power innovations into the marketplace. Investment in this type of transformative innovation receives only limited funding (if at all) from the private sector, but is central to expanding our clean energy economy.  NRDC’s support for ARPA-E is best outlined here and here.

Similarly, loan guarantees made for renewable energy and energy efficiency projects can be an important tool in sound long term energy and economic policy.  Clearly, loan guarantees that either subsidize mature technologies or don’t have a net positive impact on the environment (such as to mature nuclear or advanced fossil fuel projects) are high-risk and ineffective.  Ending this practice makes obvious sense.  In contrast, the DOE loan program has made advances in conducting extensive due diligence on each clean energy project it has supported.  These efforts have ultimately helped ensure over $20 billion in new capital for renewable projects.  These types of targeted government activities should be continued.

As we focus on increasing jobs and strengthening our economy, it is vital that innovative clean technologies, which can provide tens of thousands of jobs now and millions of jobs in the long-run, and protect our environment, are given the space to reach their full potential.  That means both eliminating wasteful, harmful programs that increase our deficit while polluting the environment while also putting smart energy policies in place that can drive a new clean energy economy.