The remaining U.S. primary energy production is attributable to nuclear electric and renewable energy resources. ,

		Energy Tax Incentives

The tax code supports the energy sector by providing a number of targeted tax incentives, or tax incentives only available for the energy industry. In 2013, the tax code provided an estimated $23.3 billion in support for the energy sector. The expiration of a number of energy-related tax incentives means that, under current law, a substantial shift in balance of energy tax incentives across different types of energy resources is projected to occur (see the section " Energy Tax Incentive Trends " below). Of the federal tax support targeted to energy in 2013, an estimated 20.4% of the value of tax incentives went towards supporting fossil fuels. During 2013, an estimated 11.4% of U.S. primary source energy was produced using renewable resources. The tax credits for alcohol fuels (including ethanol) expired at the end of 2011, while the tax credits for biodiesel and renewable diesel expired at the end of 2014. Thus, after 2014, under current law, there are no projected costs associated with tax incentives for renewable fuels. Expired tax incentives may be extended, however, as part of the "tax extenders." The Section 1603 grant option is not available for projects that began construction after December 31, 2011. Extension of expired tax incentives for energy efficiency would increase the cost of energy efficiency-related tax incentives. In the case of the Section 1603 grant program, since outlays occur when property is placed in service, costs for this program will continue to be incurred long past its 2011 expiration date. Accounting for expired provisions has additional implications for trends in tax-related support for different types of energy resources. Between 2013 and 2018, the cost of tax-related provisions that support renewable energy (both renewables and renewable fuels) is projected to decline from $13.4 billion to $5.0 billion (see Figure 3 ). This cost is projected to be $4.8 billion in 2018. The increase in the share of federal financial support for renewables is largely due to the Section 1603 grants in lieu of tax credits program. The majority of energy produced comes from fossil fuels. However, since the primary tax provisions supporting renewables have expired, tax-related support for renewables has fallen in recent years, and is projected to continue to decline. For example, tax incentives designed to reduce reliance on imported petroleum may be consistent with energy security goals. Tax incentives that promote renewable energy resources may be consistent with certain environmental objectives. While subsidy per unit of production or subsidy relative to production level calculations may provide a starting point for evaluating energy tax policy, a complete policy analysis might consider why the level of federal financial support might differ across various energy technologies. Comparing Energy Production to Energy Tax Incentives: 2009 and 2010
While the proportion of primary energy production attributable to certain energy resources changes slowly over time, there are often substantial changes in the estimated value of energy-related tax incentives for certain types of energy resources from year to year.
The U.S. tax code supports the energy sector by providing a number of targeted tax incentives, or tax incentives only available for the energy industry. As Congress evaluates the tax code and contemplates tax reform, there has been interest in understanding how energy tax benefits are distributed across different domestic energy resources. For example, what percentage of energy-related tax benefits support fossil fuels (or support renewables)? How much domestic energy is produced using fossil fuels (or produced using renewables)? And how do these figures compare?
In 2013, the value of federal tax-related support for the energy sector was estimated to be $23.3 billion. Of this, $4.8 billion (20.4%) can be attributed to tax incentives supporting fossil fuels. Tax-related support for renewables was an estimated $13.4 billion in 2013 (or 57.4% of total tax-related support for energy).
While the cost of tax incentives for renewables has exceeded the cost of incentives for fossil fuels in recent years, the majority of energy produced in the United States continues to be derived from fossil fuels. In 2013, fossil fuels accounted for 78.5% of U.S. primary energy production. The remaining primary energy production is attributable to nuclear electric and renewable energy resources, with shares of 10.1% and 11.4%, respectively.
The balance of energy-related tax incentives has changed over time, and it is projected to continue to change, under current law, in coming years. Factors that have contributed to recent changes in the balance of energy-related tax incentives include
The expiration of tax-related support for renewables fuels. Tax-related support for renewable fuels declined substantially after the tax credits for alcohol fuels was allowed to expire at the end of 2011. Other fuels-related incentives also expired at the end of 2014 (although these may be extended as part of the "tax extenders"). The Section 1603 grants in lieu of tax credits program. A major source of tax-related support for renewables in recent years has been the Section 1603 grant program. This program is not available for projects beginning construction after the end of 2011. While outlays for this program increased through 2013, as qualified property was placed in service, outlays for Section 1603 grants have begun to decline. Expired tax incentives for renewables and energy efficiency. Several other incentives for renewables and energy efficiency have expired (again, these may be extended as part of the tax extenders). Since tax-related support for fossil fuels is expected to remain roughly constant under current law, the expiration of renewables- and efficiency-related incentives means the share of tax incentives for these sectors is expected to decline in future years, under current law.
While subsidy per unit of production or subsidy relative to production level calculations may be one starting point for evaluating energy tax policy, a complete policy analysis might consider why the level of federal financial support differs across various energy technologies. Tax incentives for energy may support various environmental or economic objectives. For example, tax incentives designed to reduce reliance on imported petroleum may be consistent with energy security goals. Tax incentives that promote renewable energy resources may be consistent with certain environmental objectives.