Subsidyscope

Direct Expenditures in the Energy Sector

The federal government directly funds companies, universities and other organizations with grants and contracts to provide energy-related goods and services on its behalf. Through such funding, the U.S. Department of Energy (DOE) and other agencies provide resources that support both producers and consumers of energy as well as users of energy-related research.

Unfortunately, there is little data available to determine how much of the federal spending on energy-related grants and contracts may constitute a subsidy to this sector. In the absence of this information, Subsidyscope provides data on all those direct expenditure programs that are most likely to contain a subsidy in order to better estimate the upper bound of government subsidies in this sector. Not all of the spending in these programs would properly be counted as a subsidy; in some cases, very little of what is spent on a program may be a subsidy. In many cases, especially for competitively-bid contracts, there may be no subsidy at all.

Direct expenditures are easier to measure than spending on other programs containing subsidies, such as tax expenditures or loan programs. However, users of this data should be aware that the federal data Subsidyscope collects from the government can sometimes be of poor quality, particularly in that there may be omissions.1

Based on available federal data for fiscal year 2009, the federal government granted a total of $18.6 billion directly to companies or organizations carrying out energy-related work that Subsidyscope deems likely to contain a subsidy. This is just under 3 percent of all government grants over that time period ($716.8 billion). Also during fiscal year 2009, contracts to entities in the energy sector totaled $21.3 billion, about 4 percent of all government contracts ($523 billion). Of those energy contracts, nearly 20 percent, or $4.3 billion, were not competed. Subsidyscope considers non-competed contracts as more likely to contain a subsidy than competed contracts.

Subsidies through Grants

Figure 1: Direct Expenditures in the Energy Sector FY2000-2009 (billions of nominal dollars)

Source: Subsidyscope analysis of data from USAspending.gov. Estimates are in nominal dollars and reflect the data as they appear in USAspending.gov at the time of this analysis.

Note:

Data presented are obligations to programs that Subsidyscope deems likely to contain a subsidy. All grant programs in Subsidyscope's definition of the energy sector are included.

Based on Subsidyscope's review, all federal grant programs in the energy sector (see Table 1 at the bottom of the page) were determined to potentially contain a subsidy (see Section B. 4. of our methodology). However, even if a grant program does include a subsidy component, estimates of the actual subsidy are often not calculated or made available. Given these limitations, we present all federal spending on programs that may contain a subsidy, as it is the upper bound of what might potentially be a subsidy for the energy sector.

Almost 72 percent of the energy-related dollars spent through grant programs in fiscal year 2009 were carried out by DOE. Other agencies that implement energy-related programs include the U.S. Department of Agriculture, the Department of Housing and Urban Development, the Department of Health and Human Services, the Department of the Interior and the Nuclear Regulatory Commission. In fiscal year 2009, the five largest grant programs accounted for over 90 percent of the total grants in the energy sector. These programs are briefly described below. See Table 1 at the bottom of the page for a complete list of programs that Subsidyscope deems likely to contain a subsidy and their corresponding fiscal year 2009 funding amounts.

The largest grant in the energy sector for fiscal year 2009 was DOE's Weatherization Assistance for Low-Income Persons Program (WAP), which was allotted $5.6 billion that year. In fiscal year 2009, this program received almost $5.4 billion above previous funding levels as part of the American Reinvestment and Recovery Act of 2009 (ARRA), also known as "stimulus funds." This more than twentyfold increase in funding for that program helps explain the spike in direct expenditures depicted in Figure 1, above. Funding in fiscal year 2008, before the spike, was $221 million and the Catalogue of Federal Domestic Assistance projects that funding in fiscal year 2010 will return to the range of $225 million.2 DOE funds WAP in order to improve the energy efficiency of low-income homes through the installation of weatherization materials such as attic insulation, caulking, weather-stripping and modifications to heating and cooling systems.3 WAP funds are directed to states or state agencies, who in turn administer the funds to eligible beneficiaries.

The second largest grant program in the energy sector for fiscal year 2009 was the Low-Income Home Energy Assistance Program (LIHEAP), administered by the U.S. Department of Health and Human Services (HHS). The program received $5.1 billion in fiscal year 2009, up from $2.6 billion in fiscal year 2008.4 LIHEAP grants go to states and other jurisdictions to assist households with energy costs. A portion of these funds may also be used for weatherization of homes.5

The third largest grant program in fiscal year 2009, which received a more than hundredfold increase in one-time stimulus funds, is the State Energy Program. In fiscal year 2009, this program was funded at $3.2 billion, up from $30 million in fiscal year 2008. The program's funding is projected to decrease back down to around $70 million in fiscal year 2010.6 This program gives financial and technical assistance to states for energy efficiency and conservation projects with the goal of reducing fossil fuel emissions, reducing energy use and increasing energy efficiency.7

The fourth largest energy-related grant program in fiscal year 2009 was DOE's Energy Efficiency and Conservation Block Grant Program (EECBG), which was entirely funded by ARRA. This program, which received $1.5 billion in fiscal year 2009, provides funding to states through block grants and has the same objectives as the State Energy program: to reduce fossil fuel emissions, reduce energy use and increase energy efficiency in various sectors.8

The fifth largest energy-related grant program in fiscal year 2009 was the Office of Science Financial Assistance Program, which received $1.4 billion that year. This program funds research in the basic sciences and advanced technology concepts relating to energy. If funds allocated through ARRA were not included in this analysis, this would be the largest DOE grant program in the energy sector (excluding the HHS grant above), indicating that research is typically one of the largest beneficiaries of DOE energy-related grants. While funding levels for some of the programs mentioned previously decrease in fiscal year 2010, funding for the Office of Science Financial Assistance program is likely to remain at a consistent level in fiscal year 2010.9

Subsidies through Contracts

In addition to awarding grants, the government directly contracts with other organizations to provide energy-related goods and services, such as fuel, infrastructure maintenance and research. Under a contract, a subsidy occurs when the government pays more than fair market value for a good or service. In many cases it is difficult to determine when a subsidy is included, as the fair market value may be a matter of opinion.

Figure 2: Non-competed Contracts in the Energy Sector FY2000-2009 (billions of nominal dollars)

Source: Subsidyscope analysis of data from USAspending.gov. Estimates are in nominal dollars and reflect the data as they appear in USAspending.gov at the time of this analysis.

Note:

Subsidyscope believes that government spending on non-competed contracts is actually more consistent during this time period than the figure represents, and that the dips reflect poor data resulting from reporting variation, rather than actual decreases in energy-related contracts. See the text below for additional information.

Subsidyscope does not attempt to determine which specific contracts include a subsidy or measure what the subsidy may be. We do presume, however, that competed contracts—contracts that are subject to an open bidding process—are generally less likely to have a subsidy component, even though the bidding process may include certain preferences.

Subsidyscope's focus on non-competed contracts reflects the fact that the federal government generally prefers agencies to compete contracts because competition is expected to result in lower costs and/or better quality goods and services.10 In contrast, non-competed contracts are generally assumed to be more likely to cost the government more than the fair market value and may be scrutinized solely on the basis that there is not clear justification for why they were not competed.

While all 13,823 non-competed contracts in the energy sector in fiscal year 2009 totaled $4.3 billion, the top 100 contracts totaled nearly $3.7 billion. Seven of these contracts exceeded $100 million each, with recipients including oil and gas companies, a foreign contractor and the Tennessee Valley Authority, among others.

Subsidyscope has previously determined that there can be problems with the quality of the contracts data that are reported by agencies to USAspending.gov. In order to sort government contracts by economic sector, Subsidyscope uses the North American Industry Classification System (NAICS) codes to match contracts to the appropriate economic sector, or Product Service Codes if NAICS codes are not available. (See Section C of Subsidyscope's methodology here for more on how contracts are organized by sector.)

Specifically, for the data presented in Figure 2 above, Subsidyscope found that there is significant variation in agencies' use of NAICS codes when reporting contracts to USAspending.gov over the ten-year period from fiscal year 2000 to 2009. This trend indicates a general underreporting of contracts in the energy sector, and is also likely responsible for the large drop in the reported number of non-competed contracts in the energy sector from fiscal year 2000 to 2001 and the spike in contracts in fiscal year 2005. Subsidyscope believes that the trend is actually more consistent during this time period than Figure 2 represents, and that the dips reflect poor data resulting from reporting variation, rather than actual decreases in energy-related contracts.

To access Subsidyscope's search interfaces for direct expenditures data from the federal government’s USAspending.gov Web site, click here for grants and here for non-competed contracts. The table below provides an aggregate summary of the grants made to each program in the energy sector in fiscal year 2009, retrieved from Subsidyscope's searchable database of grants.

Table 1: Energy Sector Direct Expenditure Programs, FY 2009

CFDA #	CFDA Program Title	FY 2009 $
81.042	Weatherization Assistance for Low-Income Persons	$5,613,959,073
93.568	Low-Income Home Energy Assistance	$5,098,501,072
81.041	State Energy Program	$3,238,118,207
81.128	Energy Efficiency and Conservation Block Grant Program (EECBG)	$1,495,369,254
81.049	Office of Science Financial Assistance Program	$1,362,370,873
81.089	Fossil Energy Research and Development	$513,941,221
81.087	Renewable Energy Research and Development	$470,336,632
81.121	Nuclear Energy Research, Development and Demonstration	$208,832,514
81.086	Conservation Research and Development	$198,794,179
81.122	Electricity Delivery and Energy Reliability, Research, Development and Analysis	$118,190,330
10.312	Biomass Research and Development Initiative Competitive Grants Program (BRDI)	$50,089,775
10.868	Rural Energy for America Program	$49,790,376
81.117	Energy Efficiency and Renewable Energy Information Dissemination, Outreach, Training and Technical Analysis/Assistance	$38,885,086
81.127	Energy Efficient Appliance Rebate Program (EEARP)	$29,750,800
81.129	Energy Efficiency and Renewable Energy Technology Deployment, Demonstration and Commercialization	$21,775,078
81.065	Nuclear Waste Disposal Siting	$15,893,400
14.506	General Research and Technology Activity	$13,962,246
14.318	Assisted Housing Stability and Energy and Green Retrofit Investments Program (Recovery Act Funded)	$11,750,000
77.008	U.S. Nuclear Regulatory Commission Scholarship and Fellowship Program	$10,249,374
10.854	Rural Economic Development Loans and Grants	$10,214,156
10.859	Assistance to High Energy Cost Rural Communities	$9,667,519
81.003	Granting of Patent Licenses	$6,602,809
10.775	Renewable Energy Systems and Energy Efficiency Improvements Program	$4,577,245
15.656	Recovery Act Funds - Habitat Enhancement, Restoration and Improvement.	$3,624,004
77.006	U. S. Nuclear Regulatory Commission Nuclear Education Grant Program	$3,194,065
81.057	University Coal Research	$2,069,376
81.036	Inventions and Innovations	$1,704,060
77.007	U.S. Nuclear Regulatory Commission Minority Serving Institutions Program (MSIP)	$1,105,000
14.421	Alaska Coastal Marine Institute	$730,079
77.009	U.S. Nuclear Regulatory Commission Office of Research Financial Assistance Program	$75,000
14.422	Louisiana State University (LSU) Coastal Marine Institute (CMI)	$48,531
81.079	Regional Biomass Energy Programs	$6,641
10.865	Biorefinery Assistance	$0
81.105	National Industrial Competitiveness through Energy, Environment, and Economics	-$25,742
81.119	State Energy Program Special Projects	-$470,064
10.078	Bioenergy Program (BIO)	not reported
10.685	Community Wood Energy Program	not reported
10.686	Forest Biomass for Energy	not reported
10.857	State Bulk Fuel Revolving Fund Grants	not reported
15.148	Tribal Energy Development Capacity Grants	not reported
15.425	Offshore Research Technology Center (OTRC) Texas Engineering Experiment Station (TEES)	not reported
15.819	Energy Cooperatives to Support the National Coal Resources Data System (NCRDS)	not reported
23.011	Appalachian Research, Technical Assistance, and Demonstration Projects	not reported
78.004	Commodity Futures Reparations Claims	not reported
81.131	Expand and Extend Clean Coal Power Initiative	not reported
81.132	Geologic Sequestration Site Characterization	not reported
81.133	Geologic Sequestration Training and Research Grant Program	not reported
81.134	Industrial Carbon Capture and Storage (CCS) Application	not reported
81.135	Advanced Research and Projects Agency - Energy Financial Assistance Program	not reported
Total		$18,603,682,169

Source: Subsidyscope analysis of data from USAspending.gov. Table excludes loans and loan guarantees.

Note:

Some programs report negative totals for FY 2009. This reflects a downward adjustment to obligations made in previous years.

1. See Subsidyscope's Web page on data quality: "Federal Records Missing Important Data."
2. Catalog of Federal Domestic Assistance. Weatherization Assistance for Low-Income Persons.
3. Ibid.
4. Subsidyscope analysis of USAspending.gov.
5. Catalog of Federal Domestic Assistance. Low-Income Home Energy Assistance.
6. Catalog of Federal Domestic Assistance. State Energy Program.
7. Ibid.
8. Catalog of Federal Domestic Assistance. Energy Efficiency and Conservation Block Grant Program (EECBG).
9. Catalog of Federal Domestic Assistance. Office of Science Financial Assistance Program.
10. Department of Energy. "Competition in Contracting Guide, version 2." p. 2.

Last updated September 9, 2010.