EIA Energy Subsidy Estimates: A Review of Assumptions and Omissions
This Review provides the most detailed look to date at gaps in federal tracking of energy subsidies. In addition to evaluating the research approach used by the US Energy Information Administration (EIA), the Review assesses how key assumptions and omissions in EIA's work resulted in a substantial undercounting of federal energy subsidies and an inaccurate portrayal of subsidy distribution across fuels. EIA estimates are also placed in the context of other assessments of domestic energy subsidies conducted over the past thirty years.
With energy subsidy reform increasingly viewed as a central tenet of any climate change mitigation strategy, ensuring accurate information on the size and distribution of energy subsidies is critical.
Key factors affecting EIA's results included a restrictive research mandate; inappropriately narrow inclusion rules on subsidy policies, sometimes inconsistently applied; and a variety of valuation issues (see table below). In combination, these problems resulted in estimates that have more to do with the research method than with the actual policies in place.
Related documents:
Complete Review
Executive Summary only
Extracted table comparing EIA subsidy estimates to other subsidy research
Review of "price gap" approach commonly used internationally to measure energy subsidies
Earlier reviews of EIA subsidy estimates: 2001. 1993.
Expected Bias Resulting from EIA Subsidy Definition and Valuation Conventions
Issue | Scale of impact/year | Issue understates subsidies to: |
Use of point rather than range estimates | $5.3 billion for subset of tax expenditures alone | Oil, gas, nuclear, coal, efficiency |
Use of revenue-loss rather than outlay-equivalent metric for tax subsidies | Billions | Oil, gas, wind, biofuels |
No marginal analysis of new and expanded subsidies | Billions | Clean coal, nuclear |
Use of current account rather than actuarial balance on trust funds to assess subsidy level | Billions | Nuclear, fossil (to a lesser extent) |
Omission of subsidies related to insurance and publicly provided market oversight | Billions | Nuclear, coal, hydroelectricity |
Omission of minimum purchase requirements such as Renewable Fuel Standard | Billions | Liquid biofuels; renewable electricity if federal RPS enacted |
Omission of support to bulk fuel transport infrastructure | ~1–2 billion | Oil, coal, and, to a lesser extent, ethanol and liquefied natural gas |
Omission of support to energy security | >$10 billion | Primarily oil, with some benefits as well to nuclear and natural gas |
Omission of subsidized credit through export credit agencies and multilateral development banks | Unknown | Oil, gas, coal, renewables, new nuclear |
Omission of use of tax-avoiding corporate forms | Unknown | Oil, gas, coal |
Omission of lease-related subsidies | >$1 billion | Oil and gas, synfuels |
Inadequate reflection of subsidies to public power | >$1 billion | Coal, natural gas, nuclear, hydroelectricity |
Omission of most accelerated depreciation to energy | Billions | Oil, coal, natural gas, wind, biofuels, new nuclear |
Omission of most energy-related tax-exempt bonds | Billions | Coal, natural gas, wind, biofuels |