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Fuel Subsidies Need to Be Debated, Institute Says

The disputed dollar impacts are sufficiently large and the deficit reduction talks equally intense so a full range of federal energy subsidies need to be debated by Congress and others, according to a white paper issued recently by the Washington DC-based Environmental and Energy Study Institute (EESI) which generally supports renewable energy.

EESI said that the price tag over the next decade for some indirect subsidies reviewed in EESI's paper amounts to $50 billion.

EESI's paper concluded that "over the past century, the fossil fuel industry has matured, and incentives [to encourage its] development may no longer be justified." During this same 100 years, "a range" of new technologies has emerged, making possible a variety of energy resources.

The think tank, which was founded in 1984 by a bipartisan Congressional caucus, said indirect subsidies such as the ones it focused on are not periodically reexamined. Thus, EESI author David Sher argued that it is "very difficult" to ever change political, economic, scientific and environmental circumstances to feed into the public policy decision-making process.

The indirect fossil fuel subsidies examined by Sher are: directed tax subsidies (special tax code provisions); other tax benefits; "abnormal accounting" (special treatment for fossil fuel-related production); royalty relief; and societal costs. He called this a "selected array" of a much larger group.

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