Report: Taxpayers lost $48 billion subsidizing failed efforts to reduce greenhouse gas emissions

Noted highlighted text in the below media release.

Click for the report.

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Date: June 20, 2013

FOR IMMEDIATE RELEASE

U.S. Tax Code Has Minimal Effect on Carbon Dioxide and Other Greenhouse Gas Emissions, Report Says

WASHINGTON — Current federal tax provisions have minimal net effect on greenhouse gas emissions, according to a new report from the National Research Council. The report found that several existing tax subsidies have unexpected effects, and others yield little reduction in greenhouse gas emissions per dollar of revenue loss.

At the request of Congress, a Research Council committee was formed to evaluate the most important tax provisions that affect carbon dioxide and other greenhouse gas emissions and to estimate the magnitude of the effects. The report considers both energy-related provisions — such as transportation fuel taxes, oil and gas depletion allowances, subsidies for ethanol, and tax credits for renewable energy — as well as broad-based provisions that may have indirect effects on emissions, such as those for employer-provided health insurance, owner-occupied housing, and incentives for investment in machinery.

Using energy economic models based on the 2011 U.S. tax code, the committee found that the combined effect of energy-related tax subsidies on greenhouse gas emissions is minimal and could be negative or positive. It noted that estimating the precise impact of the provisions is difficult because of the complexities of the tax code and regulatory environment. However, it found that these provisions achieve very little greenhouse gas reductions at substantial cost; the U.S. Department of the Treasury estimates that the combined federal revenue losses from energy-sector tax subsidies in 2011 and 2012 totaled $48 billion. While few of these provisions were created solely to reduce greenhouse gas emissions, they are a poor tool for doing so, the report says.

The models indicate that the provisions subsidizing renewable electricity reduce greenhouse gas emissions, while those for ethanol and other biofuels may have slightly increased greenhouse gas emissions. They also suggest that broad-based provisions such as tax incentives to increase investment in machinery affect emissions primarily through their effect on national economic output. In other words, when a broad-based tax provision is removed, the percent change in emissions is likely to be close to the percent change in national output.

In addition, the committee examined the broader implications of tax provisions and climate change policy and concluded that tax policies can make a substantial contribution to meeting the nation’s climate change objectives, but the current approaches will not accomplish that. While the report does not make any recommendations about specific changes to the tax code, it says that policies that target emissions directly, such as carbon taxes or tradable emissions allowances, would be the most effective and efficient ways of reducing greenhouse gases.

The study was sponsored by the U.S. Department of the Treasury. The National Research Council is the principal operating arm of the National Academy of Sciences and the National Academy of Engineering. Together with the Institute of Medicine, these private, nonprofit institutions provide science, technology, and health policy advice under a congressional charter granted to NAS in 1863. For more information, visit http://national-academies.org

7 responses to “Report: Taxpayers lost $48 billion subsidizing failed efforts to reduce greenhouse gas emissions

  1. That $48b for nothing is only part of what was lost. What about the higher costs for everything related to energy and the lost economic activity?

  2. But these measures achieved the main intended (but unspoken) effects of buying political alliances, providing graft, punishing those who contributed to the opposing side during the elections, and funding further bloating of bureaucracy, at which they were unqualified successes.

  3. Reblogged this on budbromley and commented:
    But wait, that’s not all. According to the 2011 U.S. GAO report, annual federal climate spending has increased from $4.6 billion in 2003 to $8.8 billion in 2010, amounting to $106.7 billion over that period.

  4. Robert L Bell

    Interesting report, you guys should try to read it. It shows that subsidies for renewable electricity tend to decrease emissions while subsidies for carbon fuels tend to increase emissions. No surprises there.

    The overall conclusion, which Mr Flying-Monkey-Guy left out of his little press release, is that a properly constructed tax policy would be an effective part of our approach to greenhouse gas emissions.

    To whit:

    In addition, the committee examined the broader implications of tax provisions and climate change policy and concluded that tax policies can make a substantial contribution to meeting the nation’s climate change objectives, but the current approaches will not accomplish that. While the report does not make any recommendations about specific changes to the tax code, it says that policies that target emissions directly, such as carbon taxes or tradable emissions allowances, would be the most effective and efficient ways of reducing greenhouse gases.

    • One would first have to have an irrational fear of “greenhouse gas emissions.”

    • What are the results of doing this tax emissions bit other than more graft for our leaders to spread around along with more expensive and probably less reliable energy?

    • So taxing the crap out of us didn’t work, so REALLY taxing the crap out of us will? Those same proposals have already proven a failure in Europe, why on earth would you think they would work in the US?

      “Those who do not learn from history are doomed to repeat it” (para)

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