• AEA in the news
  • December 18, 2015

Congress will lift the oil export ban, boost clean energy subsidies. Is that a good trade?

Yurii Bukhanovskyi/Bigstock

In an article about tax subsidies for renewable energy sources, Vox cited a 2014 paper from the American Economic Review: Papers and Proceedings. In How Effective Are U.S. Renewable Energy Subsidies in Cutting Greenhouse Gases?, the authors conclude that two major subsidy programs have reduced U.S. carbon emissions by only 0.3%. The effect is smaller than might be expected in part because the subsidies reduce the price of gas to motorists, which in turn encourages more gasoline use and more emissions.