US federal incentives have chiefly benefited oil and gas industries

The main beneficiaries of more than $ 700 bn of federal energy incentives over the past five decades have been the oil and natural gas industries, a new study reveals.
The oil and natural gas industries together garnered 60 % of federal incentives between 1950 and 2006, with 46 % of the roughly $ 725 bn in federal support going to the oil sector, according to the report by the consulting firm Management Information Services Inc (MISI).

The report shows that the oil industry has benefited from $ 335 bn in combined incentives, with natural gas receiving $ 100 bn.
The MISI study also shows that, contrary to some claims, federal energy incentives have not gone to nuclear energy technologies at the expense of renewable energy sources, such as wind and solar. Of the total incentives provided since 1950, nuclear energy has received 9 % ($ 65 bn), while renewable energy has received 6 % ($ 45 bn). Coal and hydroelectric energy sources, meanwhile, have received 13 % ($ 94 bn) and 11 % ($ 80 bn) of the total respectively.

The report identifies six categories of incentives: tax policy, regulation, research and development funding, market activity, government services and disbursements.
"Tax policy has been, by far, the most widely used form of incentive mechanism, accounting for $ 325 bn (45 %) of all federal expenditures since 1950," the report states. "The oil and gas industries, for example, receive percentage depletion and intangible drilling provisions as an incentive for exploration and development. Federal tax credits and deductions have also been utilized to encourage the use of renewable energy."

Federally funded regulation and research and development funding, at about 20 % each, are the second- and third-largest incentives.
MISI is a Washington, DC-based firm that specializes in economic research and management consulting. It conducted the study for the Nuclear Energy Institute to provide insight into the history of federal energy incentives. Information presented in the MISI report was compiled from publicly available budget documents prepared by federal agencies with a role in energy development.

Each energy type benefits from a mix of federal incentives. Federal tax concessions for oil and gas are the largest of all incentives, amounting to about 80 % of all tax-related allowances for energy. Regulation of prices on oil from stripper wells or new wells comprises the second largest amount of incentives aimed at a particular energy type.
The federal government's primary incentive to nuclear energy has been in the form of research and development (R&D) programs. Of the incentives benefiting nuclear energy, 85 % ($ 67 bn) has come in the form of R&D funding.

Total incentives for nuclear energy are $ 2 bn less than that because the industry pays more than it receives in disbursements as the result of contributions industry has made to the federal Nuclear Waste Fund.
According to MISI's analysis, expenditures on nuclear waste disbursements were approximately $ 14 bn less than receipts to the Nuclear Waste Fund. Only 8 % ($ 5.3 bn) of the nuclear energy R&D funding has been for the light water reactor technology used in the 104 reactors that supply nearly 20 % of US electricity.

Renewable R&D funding outpaces nuclear energy since 1994
Since 1988, federal spending on nuclear energy R&D has been less than spending on coal research and, since 1994, has been less than spending on renewable energy research. Coal produces about half of US electricity, and wind and solar together less than 2 %.
Research and development expenditures for nuclear, coal and renewables expanded greatly after 1975, but this increase was especially marked for coal and renewables.

Between 1976 and 2006, the federal government spent more than five times as much on coal R&D ($ 26.1 bn) as it had in the previous quarter century, and more than 10 times as much on wind and solar R&D ($ 17.3 bn.)
"The common perception that federal energy incentives have favoured nuclear energy at theexpense of renewable energy such as wind and solar is not supported by the findings of this study," said Roger Bezdek, president at MISI.