On Monday, BPC’s Energy Project brought together leading political and energy experts for a discussion on “Overhauling Energy Subsidies: Confronting the New Fiscal Reality.” The event featured BPC Energy Project co-chairs former Senators Byron Dorgan and Trent Lott, along with Steve Bell (Director, BPC’s Economic Policy Project), Walter Howes (Managing Partner, Verdegris Capital), Stephen Cormstock (Manager of Tax Policy, API), Dave McCurdy (President and CEO, AGA), and VADM Dennis McGinn (USN ret.; President, ACORE).
With energy subsidies and tax expenditures becoming a key issue in the debate over reducing the federal debt, the event examined the likelihood for near-term congressional action on energy subsidies and tax expenditures and the need for a broad evaluation of current energy subsidies, evaluating their effectiveness across all sectors and technologies. Both panels provided a good sense of the prospects, challenges and key issues related to energy subsidy reform although they also demonstrated that there are a range of views on this issue.
The first panel focused its discussion on the prospects for congressional action by the Joint Select Committee and beyond, agreeing that “energy revenues, expenditures, credits will be under the microscope,” as stated by Senator Lott. The second panel dove deeper into specific subsidies, examining why they are important, how they might be measured, and what trade-offs need to be considered if they were to go away. Although views differed on what subsidies and policy goals are most important, panelists stressed that the country needs to address these issues “strategically,” and that predictability and stability are critical when incentivizing long-lived capital investments. As VADM McGinn stated: “blunt force approaches to solutions don’t work.”
In light of the country’s fiscal situation and our national energy challenges, as the event illustrated, the time has come to reexamine energy subsidies. However, the event also made clear that any such reevaluation should look at the comprehensive suite of energy technologies and take a long-term, strategic view.
Stay tuned. Over the coming months, BPC’s Energy Project will do just this as we continue to explore key policy issues related to energy subsidy reform.