In Washington, the Energy Information Agency says federal subsidies for renewable energy—including biofuels for transportation use and renewable generation of electricity—dropped to $6.7 billion in fiscal year (FY) 2016, a 56% decline from FY 2013. Renewable subsidies in FY 2010 and FY 2013 were approximately $15 billion, more than double FY 2016 levels, as support from the American Recovery and Reinvestment Act of 2009 (ARRA) lessened. Despite the decline, renewable energy continued to receive a large share of total federal energy subsidies, accounting for 46% of the FY 2016 total.
Tax expenditures provided 80% of FY 2016 renewables subsidies. More than half (51%) of the $5.6 billion in renewable tax expenditures went to biofuels. Biofuels accounted for 77% of tax expenditures in FY 2010, but only 31% in FY 2013, largely because of the expiration of the Volumetric Ethanol Excise Tax Credit at the end of 2011. Biofuels tax expenditures increased nearly $1 billion between FY 2013 and FY 2016 (from $1.7 billion to $2.7 billion) as a result of the $1 per gallon biodiesel blenders tax credit. The Renewable Fuel Standard (RFS), which mandates the blending of biofuels into the nation’s fuel supply, generated demand for these fuels by increasing targets.
