Subsidyscope relies solely on government figures to estimate subsidies and spending on programs that are likely to contain a subsidy. Subsidyscope recognizes that government data can be of poor quality and, in particular, may not include some types of subsidies. The data may also contain gaps that prevent allocating published subsidy data to recipient sectors. All of these limitations can result in omissions of federal support that may, nonetheless, influence markets. Below, Subsidyscope presents examples of these limitations with respect to the energy sector.
Estimates by two separate entities (Treasury and JCT) sometimes differ by a large amount.
Re-estimates of tax expenditure figures based on actual tax returns are not provided to the public for comparison to previous tax expenditure estimates.
Many tax expenditure provisions are aggregated at a level that makes breaking out benefits to the energy sector, and within the energy sector, impossible.
The government could routinely calculate and describe the differences between Treasury and JCT tax expenditure estimates.
Treasury could supply data allowing accurate apportionment of current aggregated tax subsidy estimates.
Credit subsidies benefitting energy
Examples:
Export Import Bank loans/loan guarantees
Domestic credit support for energy infrastructure
Federal subsidy estimates exclude loan administration costs and discount expected cash flows using a risk-free rate rather than a rate reflecting market risk.
Government agencies could expand disclosure of credit terms and performance and incorporate administrative costs and appropriate discount rates into subsidy estimates.
Subsidized user fees for energy-related goods and services
Examples:
Inland waterway system construction and maintenance (used by bulk coal and oil)
Reclamation and remediation of abandoned extraction and processing sites
Long-term management of nuclear waste
Infrastructure-related subsidies require allocation across multiple beneficiaries.
Government estimates for reclamation and remediation by sector either do not exist, or are subject to a great deal of uncertainty.
Cost adequacy estimates may not be financially or actuarially sound.
Government agencies could provide estimates of the use of government infrastructure and services by sector, and corresponding payments with assumptions that are clear and regularly updated.
Indemnification
Examples:
Legislative caps on liability for energy-related risks such as nuclear accidents
Potentially inadequate coverage for other risks, such as catastrophic dam failure
No government data source evaluates these exposures in a consistent and systematic way.
GAO or other interested parties could establish a list of areas where the government is directly or indirectly indemnifying private parties from liability.
The government could supply data allowing accurate apportionment of these subsidies to recipient sectors.
Consumption mandates
Examples:
Government rules on certain energy consumption and vehicle purchases subsidize producers through higher consumer costs rather than through government outlays
No recurring government data on the economic impact of these rules.
EIA or the relevant regulating entity could issue periodic assessments of the market effect of such rules.