fossil fuel subsidies

Definitional problems and data gaps in PJM capacity repricing proposal likely to bias adjustments against renewable energy

PJM Interconnection LLC (PJM) has been worried that certain state subsidies harm the competitiveness of capacity auctions within its territory.  PJM serves as the grid operator for all or parts of Delaware, Indiana, Illinois, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.  Its service area spans nearly a quarter million square miles, and a population of 65 million -- roughly 20% of the country.  

Energy Subsidies within PJM: A Review of Key Issues in Light of Capacity Repricing and MOPR-Ex Proposals

In its proposed tariffs to remove potential distortions caused by subsidies in capacity markets, PJM includes a number of limitations and exclusions that appear to result in unequal evaluation of subsidies across different fuel cycles. This will likely impede PJM’s core objective of ensuring competitive, nondiscriminatory auctions in the wholesale capacity market.

Tax reform and the energy sector: looking for winners and losers

The optimal position for your industry in any tax reform is to see general tax rates drop while also keeping all of your old subsidies.  The political lobbying on these bills is enormous, and given the scale of the energy sector in the US economy, and the need to transition towards lower carbon fuel sources, it seemed important to look at the tax reform proposals through the lens of energy.

Subsidies to suppliers in the PJM Interconnection go to fossil and nuclear, not just renewables

PJM Interconnection is a regional transmission operator (RTO) serving more than 60 million customers in 13 states and the District of Columbia.  The service region is centered in the mid-Atlantic region of the United States. Incumbent base load generators within PJM have complained that subsidies to renewable resources have been cutting their ability to win capacity market auctions, stripping them of revenue, and harming them competitively. They have been proposing adjustment factors that would improve their competitive position by adjusting bid prices to exclude the subsidy.

The Trouble with Q: Why the US should not be subsidizing carbon capture and sequestration

The mysterious Q Division in the James Bond movie franchise was always on hand with inane, though coldly effective, inventions that would save Bond and defeat even the most diabolical enemy.  In the magic of the movies, a bit of public money directed towards the R&D staff of the British Secret Service always seemed to save the day.

Fossil Fuel Subsidy and Pricing Policies: Recent Developing Country Experience

The steep decline in the world oil price in the last quarter of 2014 slashed fuel price subsidies. Several governments responded by announcing that they would remove subsidies for one or more fuels and move to market-based pricing with full cost recovery. Other governments took advantage of low world prices to increase taxes and other charges on fuels. However, the decision to move to cost recovery and market prices, ending budgetary support, has not been implemented consistently across countries.

The Unequal Benefits of Fuel Subsidies Revisited: Evidence for Developing Countries

Understanding who benefits from fuel price subsidies and the welfare impact of increasing fuel prices is key to designing, and gaining public support for, subsidy reform. This paper updates evidence for developing countries on the magnitude of the welfare impact of subsidy reform and its distribution across income groups, incorporating more recent studies and expanding the number of countries. These studies confirm that a very large share of benefits from price subsidies goes to high-income households, further reinforcing existing income inequalities.

Subscribe to fossil fuel subsidies