Report: Pa. gives $2.9B in subsidies to fossil-fuel industries

Pennsylvania is providing $2.9 billion a year in subsidies to fossil-fuel industries, but not offering similar government supports and incentives to cleaner renewable-energy development, according to a report released Tuesday by the PennFuture Energy Center for Enterprise and the Environment.

The biggest state fossil-fuel subsidies listed in the report, based on the governor's 2011-12 executive budget, are: $1.14 billion for gasoline and diesel fuel, $435 million for electricity, $322 million for fuel oil and natural gas - all exempt from various sales and use taxes - and $477 million for oil and gas local property-tax exemptions.

Christina Simeone, director of the PennFuture Energy Center and author of the report, said taxpayers and legislators may not know such fossil-fuel subsidies exist or be aware of their cumulative impact on the environment, the economy, and public health.

The subsidies, many of which have existed for decades, support mature fossil-fuel industries, she said, noting that Gov. Corbett had decided not to extend or seek such subsidies to emerging renewable-energy sources like solar and wind.

"Despite all the woe and consternation by some about incentives for new clean-energy technology, like solar and wind, the big dirty secret is that the highly profitable, fully mature fossil-fuel industry is subsidized to the hilt," Simeone said.

Patrick Henderson, Corbett's energy executive, said the PennFuture report seeks to blame the Corbett administration for tax and subsidy policies that are decades old and counts as tax breaks the results of a court ruling that struck down local oil and gas property taxes.

"If you look at this rationally, that's absurd," Henderson said. "It doesn't pass the laugh test."

The state subsidies mirror federal subsidies that provide billions of dollars of support each year for fossil-fuel production, the PennFuture report said. The subsidies are primarily in the form of tax exemptions that benefit the coal and oil and natural gas industries, but several can also help consumers, who pay lower prices for home electricity, heating oil, and natural gas if those tax breaks are passed along by the industries.

"We don't think that all subsidies are bad, but we'd like to see a level playing field where renewable energy sources can compete with fossil fuels," said Jan Jarrett, PennFuture president and chief executive officer.

Corbett did not sign a November letter sent to President Obama by the Governors' Wind Energy Coalition supporting extension of a federal renewable-energy production tax credit for seven years. The subsidy of 2.2 cents per kilowatt hour has helped push a more-than-tenfold increase in wind-facility installation over the last decade.

Henderson said the governor's decision not to sign the letter followed an administration policy that it would not support any federal spending proposals.

The Corbett administration has also indicated it would not support state subsidies for renewable energy. After funding for the state's $100 million Sunshine Program ended this year, the administration said the solar industry's success indicated it didn't need continued subsidies.

Also, a reorganization of the DEP earlier this year de-emphasized or eliminated several renewable-energy programs.