While President Obama touts a policy of “ending tax breaks for oil companies,” the Congressional Budget Office (CBO), in a new report, says that the bulk of tax subsidies go to renewable energy projects, $24 billion in 2011. See graph below.
The CBO says, “Tax preferences are generally an inefficient way to reduce environmental costs of producing and consuming energy.” They also note that some tax preferences for renewable energy have expired or will expire soon.
One thing the graph doesn’t show is the ratio of subsidy to the actual amount of energy produced. If that were factored in, we would see very little bang for the buck. This is another example of politicians trying to pick winners and losers in the market place.