The booming solar industry is under assault in the state of Louisiana. Last year, the Legislature voted to allow the state’s 50 percent tax credit to sunset by 2017, but now Gov. Bobby Jindal wants to help fill the state’s $1.6 billion budget deficit by cutting approximately $57 million from solar subsidies by 2016.
Fossil fuel-connected groups such as the Partnership for Affordable Clean Energy are also going after solar energy. PACE cited budget concerns as a reason for eliminating solar tax breaks in Louisiana while completely ignoring tax breaks five to 10 times higher for the oil and gas industry.
It’s no surprise, as PACE was incorporated by a lawyer affiliated with Southern Co., the coal utility giant, and its subsidiary, Alabama Power, and includes the Consumer Energy Alliance, an oil and gas industry front group, and coal interests as “official partners.”
In Louisiana, the tax credits for solar are dwarfed by taxpayer giveaways to the oil and gas industry. Louisiana taxpayers have provided over $1.2 billion to the oil and gas industry to subsidize fracking operations since 2010. At a cost of nearly $250 million per year, Louisiana citizens are subsidizing an industry dominated by large, mature, fossil fuel companies like XTO Energy (ExxonMobil), Halliburton and Schlumberger (the smallest of which had revenues of $22 billion in 2013).
In addition, a calculation of total oil and gas subsidies in Louisiana by Earth Track details that oil and gas subsidies in 2012 were at a minimum over $500 million (that number excludes numerous categories where oil and gas subsidies were mixed with subsidies for other sectors such as water utilities). In addition, severance tax losses, almost exclusively from oil and gas, cost the state $354 million in 2010 (LA Budget 11-12:10).
Finally, using Earth Track data on the fossil fuel sector’s use of the Industrial Tax Exemption, the utility, oil and gas industry received an additional $964 million from 2008-10. For the electricity generation and utility sector alone, the state of Louisiana subsidized major utility companies by $276 million over three years. These subsidies for utility interests do not factor into the price of fuel (like natural gas) used by utilities and subsidized by ratepayers.
Subsidies, tax credits and rebates for the fossil fuel industry dwarf the 50 percent tax credit the Legislature and Gov. Jindal are seeking to slash. If groups like PACE and leaders in the state of Louisiana are seriously concerned about the budget deficit and the impact of tax subsidies on ratepayers, they should look at the subsidies given to the 100-year-old fossil fuel and utility industry, which has received far more favorable tax treatment for decades when compared with the solar industry.
But, I wouldn’t bet on front groups like the Partnership for Affordable Clean Energy considering a discussion on giveaways to oil, gas and utility companies, because that’s very likely where PACE gets its funding.
Energy & Policy Institute