Federal EV tax credit: unnecessary, inefficient, unpopular, costly, and unfair

In April, Senator Debbie Stabenow (D-MI) introduced the Drive America Forward Act, a bill that would expand the tax credit for new plug-in electric vehicles (EVs) by allowing an additional 400,000 vehicles per manufacturer to be eligible for a credit of up to $7,000. Currently, the tax credit is worth up to$7,500 until a manufacturer sells more than 200,000 vehicles. In late September, groups that stand to benefit from the extension of the federal tax credits wrote to Senator McConnell and other leaders in Congress, encouraging them to support on the Drive America Forward Act. As IER has documented in the past, lawmakers should not extend the EV tax credit as the policy is unnecessary, inefficient, unpopular, costly, and unfair.

Unnecessary and inefficient

The EV tax credit is not necessary to support an electric vehicle market in the U.S. as one group estimates that 70 percent of EV owners would have purchased their vehicle without receiving a subsidy, which is reasonable seeing as 78 percent of credits go to households making more than $100,000 a year.  Furthermore, the federal tax credit overlaps with a number of other government privileges for EVs, including:

  • State rebates and/or other favors (reduced registration fees, carpool-lane access, etc.) in California, as well as in 44 other states and the District of Columbia.
  • Tax credits for infrastructure investment, a federal program that began in 2005 and, after six extensions, expired in 2017.
  • Federal R&D for “sustainable transportation,” mainly to reduce battery costs, averaging almost $700 million per year.
  • Credit for EV sales for automakers to meet their corporate fuel economy (CAFE) obligations.
  • Mandates in California and a dozen other states for automakers to sell Zero-Emission Vehicles—a quota in addition to subsidies.

Even if the federal tax credits were needed to support demand for EVs, the extension of the tax credit would be an absurdly inefficient means of achieving the stated goal of the policy, which is ostensibly to lower carbon emissions. The Manhattan Institute found that electric vehicles will reduce energy-related U.S. carbon dioxide emissions by less than 1 percent by 2050.


Lawmakers should be aware that the vast majority of people do not support subsidizing electric vehicle purchases. The American Energy Alliance recently released the results of surveys that examine the sentiments of likely voters about tax credits for electric vehicles. The surveys were administered to 800 likely voters statewide in each of three states (ME, MI and ND). The margin of error for the results in each state is 3.5 percent.

The findings include:

  • Voters don’t think they should pay for other people’s car purchases. In every state, overwhelming majorities (70 percent or more) said that while electric cars might be a good choice for some, those purchases should not be paid for by other consumers.
  • As always, few voters (less than 1/5 in all three states) trust the federal government to make decisions about what kinds of cars should be subsidized or mandated.
  • Voters’ sentiments about paying for others’ electric vehicles are especially sharp when they learn that those who purchase electric vehicles are, for the most part, wealthy and/or from California.
  • There is almost no willingness to pay for electric vehicle car purchases. When asked how much they would be willing to pay each year to support the purchase of electric vehicles by other consumers, the most popular answer in each state (by 70 percent or more) was “nothing.”

The full details of the survey can be found here.

Costly and unfair

Most importantly, an extension of the federal EV tax credit is unfair as the policy concentrates and directs benefits to wealthy individuals that are predominantly located in one geographic area, namely California. A breakdown of each state’s share of the EV tax credit is displayed in the map below:

In 2018, over 46 percent of new electric vehicle sales were made in California alone. Given that California represents only about 12 percent of the U.S. car market, this disparity means that the other 49 states are subsidizing expensive cars for Californians.  However, in order to understand the full extent of the benefits that people in California are receiving, some further explanation is in order.

When governments enact tax credit programs that favor special businesses without reducing spending, the overall impact is parallel to a direct subsidy as the costs of covering the tax liability shift to the American taxpayer or are subsumed in the national debt (future taxpayers). California offers a number of additional incentives on top of the federal tax credit for electric vehicles that are also driving demand for EVs in the state. These incentives include an additional purchase rebate of up to $7,000 through the Clean Vehicle Rebate Project, privileged access to high-occupancy vehicle lanes, and significant public spending on the infrastructure needed to support EVs. Therefore, the additional incentives that California (and other states) offer to promote EVs have broader impacts as these policies incentivize more people to make use of the federal tax credit, passing their costs on to American taxpayers. In other words, you’re not avoiding the costs of California’s EV policies by not living in California.

This problem is made even worse when we consider the impact of zero-emission vehicle (ZEV) regulations, which require manufacturers to offer for sale specific numbers of zero-emission vehicles. As recently as 2017, auto producers have been producing EVs at a loss in order to meet these standards, and they have been passing the costs on to their other consumers. This was made apparent in 2015 by Bob Lutz, the former Executive Vice President of Chrysler and former Vice-Chairman of GM, said:

“I don’t know if anybody noticed, but full-size sport-utilities used to be — just a few years ago used to be $42,000, all in, fully equipped. You can’t touch a Chevy Tahoe for under about $65,000 now. Yukons are in the $70,000. The Escalade comfortably hits $100,000. Three or four years ago they were about $60,000. What this is, is companies trying to recover what they’re losing at the other end with what I call compliance vehicles, which are Chevy Volts, Bolts, plug-in Cadillacs and fuel cell vehicles.”

Fiat Chrysler paid $600 million for ZEV compliance credits in 2015 (plus an unknown amount of losses on their EV sales), and sold 2.2 million vehicles, indicating Fiat Chrysler internal combustion engine (ICE) buyers paid a hidden tax of approximately $272 per vehicle to subsidize wealthy EV byers. ICE buyers were 99.3 percent of U.S. vehicle purchases in 2015. So, even if half the credits purchased were for hybrids, each EV sold in 2015 was subsidized by more than $13,000 in ZEV credit sales, in addition to all of the other federal, state, and local subsidies.

As is typical with most policies that benefit a politically privileged group, the plan to extend the federal tax credit program comes with tremendous costs, which are likely being compounded by people abusing the policy.  One estimate found that the overall costs of the Drive America Forward Act would be roughly $15.7 billion over 10 years and would range from $23,000 to $33,900 for each additional EV purchase under the expanded tax credit. Seeing as the costs of monitoring and enforcing the eligibility requirements of the EV tax credit program are not zero, it should surprise no one that the program has been abused as it has recently come to light that thousands of auto buyers may have improperly claimed more than $70 million in tax credits for purchases of new plug-in EVs. Finally, additional concerns arise over the equity of the federal EV tax credit due to the fact that half of EV tax credits are claimed by corporations, not individuals

End this charade

When the tax credit was first adopted, politicians assured us that the purpose of the program was to help launch the EV market in the U.S. and that the tax credit would remain capped at the current limit of 200,000 vehicles. At that time, we warned that once this program was in place, politicians would continue to extend the cap in order to appease the demands of manufacturers and other political constituencies that were created by the program. A decade later, we find ourselves in that exact situation. At this point, it should be clear that Congress should not expand the federal EV tax credit as the program is nothing more than an extension of special privileges to wealthy individuals and corporations that are mostly located in California. If Congress can’t find the courage to put an end to such an unfair and inefficient policy, President Trump should not hesitate to veto any legislation that extends the federal EV tax credit, as doing so would be consistent with his approach to other energy issues such as CAFE reform.

AEA to Senate: Highway Bill is Highway Robbery

WASHINGTON DC (July 30, 2019) – Today, Thomas Pyle, President of the American Energy Alliance, issued a letter to Senate Environment and Public Works Committee Chairman John Barrasso highlighting concerns about the recently introduced America’s Transportation Infrastructure Act. Included in the legislation is an unjustified, $1 billion handout to special interests in the form of charging stations for electric vehicles.  AEA maintains that provisions like this are nearly impossible to reverse in the future and create a regressive, unnecessary, and duplicative giveaway program to the wealthiest vehicle owners in the United States. 
Read the text of the letter below:

Chairman Barrasso,

The Senate Committee on Environment and Public Works is scheduled to consider the reauthorization of the highway bill and the Highway Trust Fund today.  At least some part of this consideration will include provisions that provide for $1 billion in federal grants for electric vehicle charging infrastructure.  This is among $10 billion in new spending included in a “climate change” subtitle.  All of this new spending is to be siphoned away from the Highway Trust Fund (HTF), meant to provide funding for the construction and maintenance of our nation’s roads and bridges.  The HTF already consistently runs out of money, a situation that will only be exacerbated by these new spending programs.

We oppose this new federal program for EV infrastructure for a number of reasons, including, but not limited to the following:

  • The grant program, once established in the HTF, will never be removed.  Our experience with other, non-highway spending in the trust fund (transit, bicycles, etc.) is that once it is given access to the trust fund, the access is never revoked.  Our nation’s highway infrastructure already rates poorly in significant part due to the diversion of highway funds to non-highway spending.
  • As we have noted elsewhere, federal support for electric vehicles provides economic advantages to upper income individuals at the expense of those in middle and lower income quintiles.  This grant program would exacerbate that problem.
  • This program will result in taxpayers in States with few electric vehicles or little desire for electric vehicles having their tax dollars redirected from the roads they actually use to subsidize electric vehicle owners in States like California and New York.
  • This program is duplicative.  There is already a loan program within DOE that allows companies and States to get taxpayer dollars to subsidize wealthy electric vehicle owners.

For these and other reasons, we oppose the provisions that would create a regressive, unnecessary, and duplicative giveaway program to wealthy, mostly coastal electric vehicle owners.  This giveaway not only redirects taxpayer money from the many States to the few, in looting the Highway Trust Fund it also leaves those many States, including Wyoming, with less money to maintain their own extensive road networks.


Thomas J. Pyle

Coalition to Senate Leaders: Put the Brakes on Electric Vehicle Subsidies

33 free-market organizations join effort opposing extensions or increasing EV tax credits

WASHINGTON DC (December 10, 2019) – Following the launch of their latest initiative against unnecessary subsidies, the American Energy Alliance (AEA), backed by thirty-two additional signers, issued the following letter to Senate Majority Leader Mitch McConnell urging him and his colleagues to oppose any kind of end-of-year deal that includes an extension or increase of the electric vehicle (EV) tax credit.

AEA President Thomas Pyle made the following statement:

“History has proven that lawmakers tend to cut awful deals before rushing out for the holidays. This year is shaping up to be no different. With talk by the Democrats of insisting on an expansion of the electric vehicle tax credit in any final tax extenders deal, it is up to the leaders in the Senate to protect taxpayers and oppose any such deal.”

“The evidence is overwhelming. The electric vehicle tax credit was designed to be temporary, it has proven to be inefficient, costly, unfair and a handout to wealthy elitists who primarily live on the coasts. As House Democrats have put electric vehicle subsidies at the top of their ill-conceived Green New Deal, Senate leaders must step up and put the brakes on the expansion of the electric vehicle tax credit.”

A text version of the letter is below.

We, the undersigned organizations, write to object to any compromise
that extends, expands, or enlarges the electric vehicle tax credit.
As we have repeatedly argued, the drafters of the tax credit were clear
and prudent in their crafting of the credit’s introductory language,
which limited the credit to each manufacturer’s first 200,000 electric
vehicle sales. Senator Orrin Hatch, sponsor of the original legislation in
2007, stated:

I want to emphasize that like the tax credits available
under current law for hybrid electric vehicles, the tax
incentives in the FREEDOM Act are temporary. They are
needed in order to help get these products over the initial
stage of production, when they are quite a bit more
expensive than older technology vehicles, to the mass
production stage, where economies of scale will drive costs
down and the credits will no longer be necessary.

Now, more than a decade on, the wisdom holds. With EV sales
continuing to increase year after year, no justification exists to extend,
expand, or enlarge the electric vehicle tax credit. The Senate must act
in favor of fiscal conservatism and commonsense by simply remaining
faithful to the legislation’s purpose and allowing the credit to run its

The electric vehicle tax credit is not necessary to support the vehicle
market in the U.S. It is a $9.7 billion subsidy that, for all practical
purposes, serves the wealthy. A recent study found that 79 percent of
electric vehicle tax credits were claimed by households with an
adjusted gross income of more than $100,000 a year.

Further, 46 percent of the credits flow to one state, California, despite
it making up just 12 percent of the national market for automobiles.
This geographical iniquity alone should give Senators pause as they
consider who is served by the tax credit and at whom that cost comes.
The fact of the matter is that wealthy, coastal, new car buyers and
companies like Tesla are the primary beneficiaries, while the average
American taxpayer is left on the hook.

What’s more, the majority of voters oppose this wealth transfer. According to polling research conducted last summer, two-thirds of voters say they do not want to help people buy electric vehicles. They also overwhelmingly oppose being forced to pay for new vehicle charging infrastructure. In general, American voters trust the market to sort out vehicle purchases. The Senate should trust in their wisdom.

House Democrats have put electric vehicle subsidies at the top of their
ill-conceived Green New Deal, but to add insult to fiscal injury electric
vehicles are not cleaner than modern internal combustion engines. As
explained in studies from the Manhattan Institute and the IFO Institute
in Germany, life-cycle emissions from electric vehicles may even
exceed those from new internal combustion engine vehicles.

Extending, expanding, or enlarging the electric vehicle tax credit would further enrich wealthy, coastal elites and a handful of companies. It up to you and your fellow Republicans in the Senate to protect American taxpayers.

The electric vehicle tax credit was meant to nurture an infant industry,
not provide corporate welfare in perpetuity. The electric vehicle tax
credit should be eliminated, but at the very least, Senate Republicans
can forcefully reject extending, expanding, or enlarging this dreadful

The full letter and list of signatories can be read here.

For media inquiries, please contact Jon Haubert.
[email protected]


The “Everybody Gets a Car!” Act

Last week, following the grand tradition of Oprah whereby guests receive free gifts just for attending, Democrats on the House Ways and Means Committee, led by Rep. Mike Thompson, announced a draft bill dubbed the Growing Renewable Energy and Efficiency Now Act (or GREEN Act).  But a better name for it would be the Everybody Gets a Car Act, or perhaps the No Green Lobbyist Left Behind Act.  Because just like an episode of Oprah’s favorite things, House Democrats are handing out free presents to the entire audience.  And all at taxpayer expense.

Despite the billing, most of the discussion draft does not contain new ideas.  Rather, it is mainly an expensive extension of a host of tax breaks for special interests that have either expired or are scheduled to phase out.  The gang’s all here:

  • The Production Tax Credit (PTC) for wind power,
  • The Investment Tax Credit (ITC) for solar power,
  • The electric vehicle (EV) tax credit,
  • The biodiesel tax credit,
  • Several tax breaks for for commercial and residential energy efficiency. 

As for new innovations, the bill includes:

  • A new tax credit for used EVs,
  • New subsidies for public electric vehicles charging stations,
  • Expanding ITC eligibility to cover batteries, and
  • A billion dollars (that’s billion with a B) per year for environmental justice programs at universities.  (Note: It is not clear how exactly an endowed professorship in environmental justice combats climate change, but hey since we are spending money why not give everyone some?)

Big subsidies, little power

The inclusion of the PTC and ITC in this bill is a particularly egregious example of Washington doublespeak.  In 2015, a grand bargain was reached on a multi-year extension of the PTC and ITC in exchange for a phase down of the value of those two tax subsidies.  At the time, and for many years since, we were assured by the wind and solar industries that their technology was mature and ready to compete on a level playing field.  For years now the media has been filled with assertions that wind and solar power generation are so competitive they are actually cheaper than their conventional competitors!

But as the phase down deadlines have drawn closer, the tune has predictably changed.  Suddenly these supposedly super-competitive generation sources cannot survive without continued subsidies.  Under the current phase down plan, the PTC alone is already expected to cost almost $33 billion over the 10 years to 2028.  But they need more?  Keep in mind that these billions are being spent to subsidize an industry that provided only 6.5% of electricity generation in 2018.  The ITC, projected to cost over $30 billion, subsidizes a solar industry that provides a mere 1.5% of generation.

The inclusion of new subsidy eligibility for battery storage really exposes the underlying folly of relying on wind and solar electricity generation.  At small percentages, wind and solar can slot into the existing electricity grid fairly easily because reliable power sources can be forced to (expensively) adjust to the only sometimes on wind and solar generation.  But at greater penetrations, even those a long way short of the 100% renewables fantasy being pushed in some quarters, wind and solar are too unreliable to power a modern economy.  They require backups for when the sun is not shining and the wind is not blowing.  Right now, that backup is mostly provided by natural gas, but in the 100% renewables fantasy, backup is supposed to come from vast fields of batteries.  Very expensive batteries.   That also must be subsidized.

The PTC and ITC provisions of this bill expose a stark truth: the authors know that renewable generation is a creature of government.  Wind and solar must be subsidized to be built and then batteries must be subsidized to provide backup.  And if spending their tax dollars on subsidies on the front end isn’t enough, taxpayers end up paying again for the higher electricity rates that come with a more renewable electricity grid and end up with less reliable power (see California, the UK, and Australia for examples).

Subsidizing toys for coastal elites

The route that the draft bill takes for expanding electric vehicle subsidies is drawn from the Drive America Forward Act, introduced earlier this year.  As AEA has previously described, the EV tax credit is unnecessary, inefficient, unpopular, costly and unfair

  • 70 percent of EV owners would have purchased their vehicle without receiving a subsidy, which is not surprising given that 78 percent of credits go to households making more than $100,000 a year. 
  • As AEA has extensively documented over many years, voters don’t like being forced to subsidize electric vehicle purchases.
  • The existing EV tax credit already stands to cost taxpayers $9.7 billion.
  • In 2018, over 46 percent of new electric vehicle sales were made in California alone, though California represents only about 12 percent of the U.S. car market.

Add these factors up and you have a program that subsidizes wealthy people, mostly living on the coasts, to buy an expensive vanity car, all at the expense of taxpayers and consumers in the rest of the country.

The one virtue in the design of the EV tax credit, though, is that it at least terminates after a given car manufacturer has sold 200,000 vehicles—giving it an end date.  This draft bill, however, would expand that cap to 600,000 vehicles.  One estimate puts the cost of this expansion at $15.7 billion.  Add that to the nearly $10 billion in taxpayer money already committed to EV subsidies, and we are looking at spending $25 billion to subsidize fancy toys for coastal elites.

No special interest left behind

The draft bill includes an extension of the biodiesel tax credit, which since 2005 has provided a $1 per gallon subsidy for this niche product.  This credit was originally created to reduce US oil imports in favor of domestic biodiesel production.  But in the interim, the shale oil boom means that the US is now the world’s largest oil producer and is projected to be a net oil exporter as soon as next year.  In the midst of this abundance, one might question why the federal government should continue to subsidize biodiesel.  But for a special interest lobbyist there is no such thing as a temporary program.

Also included is a new subsidy for public electric vehicle charging stations.  If the subsidies for the purchase of the EVs in the first place weren’t enough, now the federal government is being asked to subsidize their fueling too.  An EV’s range is only as great as it’s battery capacity, and unlike a gas-powered vehicle, it cannot be fueled up in five minutes and driven away.  The “solution” offered is providing charging stations in as many places as possible: grocery stores, apartment buildings, government offices, malls, you name it.  But all this infrastructure is expensive.  New power connections, especially for chargers that don’t take hours to charge, do not come cheap.  And who better to subsidize this expensive overbuilding of infrastructure than the hundreds of millions of taxpayers who don’t own electric vehicles, right?

The rest of the draft is a grab bag of handouts to seemingly everyone who has taken a meeting with the Ways and Means Democrats, but one final provision stands out as a bizarre non sequitur.  Despite the asserted goal of “addressing the threat of climate change through the tax code,” the draft bill includes $5 billion in subsidies for so-called environmental justice programs at universities.  The bill is silent on how subsidizing fringe university social science departments fights climate change, but clearly those activists had a great lobbyist.

Let’s make a deal: everyone gets a pony

Even if this bill as written is not going to pass into law, it should not be taken lightly.  This is the first step in the venerable Washington tradition of logrolling: hand out enough goodies to enough special interests to roll up sufficient votes and then insert the whole collection of giveaways into a larger bill.  The proponents of this bill want to jam as many of these handouts into a tax extenders grand bargain.  This bloated, reanimated corpse of currently dead (and dying) tax provisions can then be tacked onto must past legislation at the end of the year, such as a spending bill that forces the acceptance of this special interest pork fest as a requirement to fund the government.  However draped in green clothing, it’s an old game.  The only question is whether more sober members of Congress will give this bill the dismissal it so richly deserves.

Recent Surveys

The American Energy Alliance has conducted and sponsored a number of surveys in recent years to reveal public sentiment on key energy issues.

Survey Title and LinkRelease Date
Voters to Congress: Make a U-Turn on Special Vehicle PreferencesOctober 2019
New Survey Results Find Voters (Still) Don’t Favor EV Subsidies May 2019
New Survey Finds Voters Skeptical of Government Action on Climate Change March 2019
New Survey: Voters (Still) Find Vehicle Subsidies “Unfair”June 2018
IER-ACU Foundation Energy & Environment SurveyOctober 2017
Survey: Americans Don’t Want to Pay for Neighbor’s EVSeptember 2015
Americans Skeptical of Federal Energy DictatesSeptember 2014
IER Survey Finds Broad-Based Opposition to Carbon TaxJune 2013
IER Survey: Government Transparency Demanded By TaxpayersMay 2013
Carbon Tax SurveyDecember 2012
IER National SurveySeptember 2008

If you are looking for a specific survey sponsored by AEA and don’t see it on this list contact Jon Haubert ([email protected]) for assistance.

Does Justice Demand Fossil Fuel Divestment?

What is the fossil fuel divestment movement?

The fossil fuel divestment movement is a social activism campaign seeking to malign the natural gas, oil, and coal industries and pressure investors to withdraw their capital from such enterprises. Like the phrase “climate change denial,” the phrase “fossil fuel divestment” is used to convey to an uncritical audience that the social activism campaign is one of profound moral superiority to an evil alternative. The accusation of “climate change denial” implicitly compares opposition to the global warming agenda with the odious ideology of Holocaust denial. Likewise, “fossil fuel divestment” is meant to conjure associations with morally righteous causes, like the social activism toward divestment from South Africa’s apartheid regime. The fossil fuel divestment movement’s profound error, however, is that the natural gas, oil, and coal industries are, far from being malevolent forces, supremely important to the wellbeing of humanity.

Divestment as a tactic

A divestment movement as such—i.e., a social activism campaign to discourage certain business practices—is an ethically neutral tactic. Indeed, divestment can be a worthy social cause or an unworthy one. When companies engage in practices that violate moral standards it is a perfectly reasonable response for the public to express moral censure and to use free speech to convince investors to place their money elsewhere.

The purpose of divestment movements is primarily rhetorical. It is to cast a pall over certain companies or industries. As William MacAskill wrote in The New Yorker, “Campaigns can use divestment as a media hook to generate stigma around certain industries, such as fossil fuel. In the long run, such stigma might lead to fewer people wanting to work at fossil-fuel companies, driving up the cost of labor for those corporations, and perhaps to greater popular support for better climate policies…If divestment campaigns are run, it should be with the aim of stigmatization in mind. However, campaigners need to be careful. First, there is a risk of confusing people—suggesting that divestment will directly hit companies in the pocketbook when the evidence mostly suggests that it won’t.”

Just investment

Though the efficacy of divesting from companies has been called into question by academic researchers, the moral aspect alone is enough to motivate some activists. On moral grounds, divestment from certain sorts of companies makes perfect sense. Consider, for example, companies that contribute to tyranny or cruelty by doing business with authoritarian states like the People’s Republic of China. Or consider companies that are themselves intricately woven into the governments of anti-freedom regimes, such as Russia’s state-owned energy companies Gazprom and Rosneft. Consider also companies that engage in labor practices that would enrage us if they took place in our own countries, such as the coercion of child laborers in the Democratic Republic of Congo who mine the rare earth metals that go into electric vehicle batteries and solar panels. It is reasonable, even admirable, to encourage thoughtful investment that avoids perpetuating social evils like these.

Investors should conscientiously judge the moral worthiness of their holdings. Our conscientious judgment is that contrary to the sorts of enterprises described above, privately-owned natural gas, oil, and coal companies have been and will continue to be some of the greatest benefactors of human economic advancement the world has ever known. Natural gas, oil, and coal produced in countries with strong rule-of-law institutions, like the United States, are bringing people out of poverty and simultaneously weakening the grip of bad actors in the Middle East and Eastern Europe. The clearest example of this at present is the export of liquefied natural gas by U.S. produces to countries like Poland that have historically been at the mercy of Russia’s energy oligarchs.

When considering divestment demands, fund-managers should ask certain questions: Are companies operating within the rules established by rightful legislative or regulatory authorities? Are companies providing a good or service that provides value? Natural gas, oil, and coal companies should be judged by the same standard.

People across the globe continue to endorse resoundingly the value that natural gas, oil, and coal provide for them each day by opting into the enormously useful energy they supply. That is fundamentally what an investment return is: a demonstration that other human beings derive value from the good or service a company provides and that the company is able to do it in a financially sustainable way. By investing in privately-owned natural gas, oil, and coal enterprises, funds are building opportunities for more of those win-win propositions.

Fossil fuel divestment targets

The entities that have come under the most pressure from the fossil fuel divestment movement are university endowments, public pension funds, and charitable foundations, like faith groups and family trusts. According to 350.org, an outfit that serves as the divestment movement’s hub, “Over 1110 institutions have now committed to policies black-listing coal, oil and gas. These include sovereign wealth funds, banks, global asset managers and insurance companies, cities, pension funds, health care organizations, universities, faith groups and foundations.”

While it is often universities’ own students who are clamoring the loudest for their institutions to divest, the same cannot be said about the beneficiaries from public pension funds. And for good reason. As  Institute for Energy Research CEO Robert L. Bradley Jr. explained in the Washington Examiner:

State pension funds manage retirement benefits for public employees, such as teachers, firefighters, and police officers. And these plans are heavily invested in the energy industry. Nearly 30% of fossil fuel industry shares are held by pension funds. And almost 20% are owned in individual retirement accounts. Because they’re high performing, fossil-fuel-related stocks help secure public employees’ retirement plans. An average investment portfolio featuring fossil fuels outperforms a divested portfolio of equal risk by 0.5% per year over the long run, according to economic consultant Compass Lexecon. That might not sound like much, but over several decades it amounts to tens of thousands of dollars per worker.

That’s why divestment would hurt America’s retirees the most. Were they to divest, the nation’s 11 top pension funds would risk losing up to $430 million a year and almost $4.9 trillion over 50 years. Specifically, the California Public Employees’ Retirement System and New York’s five pension funds would risk missing out on nearly $290 million and $120 million per year, respectively.

Pension fund managers, as well as the managers of other institutional funds, have a responsibility to deliver the best results possible to the people whose money is on the line. In terms of performance, natural gas, oil, and coal stocks continue to shine. Even among activists who support fossil fuel divestment, the more informed see a conundrum. “The climate movement in some ways has the most difficult goal:

To convince people to divest from the energy we rely on every day, from stocks that make up a massive part of the economy. They perform well, too,” Rebecca Leber wrote in The New Republic. “In absence of climate legislation, these stocks will continue to perform well, especially oil and gas. An average 10-year return on investment for oil and natural gas stocks at 11.5 percent, higher than the overall 5.6 percent returns on college endowments, according to the oil trade group American Petroleum Institute.” 


Divestment can be a worthy tactic in striving for a better world. Investors should think seriously about where they put their money. But divestment is better left for cases of genuine injustice and unscrupulous behavior—of which there is no shortage today. Natural gas, oil, and coal companies that abide by laws and norms in North America, Western Europe, Japan, and other regions where rights and freedoms are upheld are not the enemies the divestment movement asserts. These companies, rather than doing the world harm, are some of its greatest benefactors.

Global energy demand rose 2.3 percent last year, with natural gas, oil, and coal making up more than two-thirds of that increase. Demand is expected to continue growing—by 2050, according to the U.S. Energy Information Administration, we should expect it to be 50 percent higher than today, with fossil fuels accounting for 70 percent of the increase. This is, of course, precisely why natural gas, oil, and coal are attractive investments.

According to the International Energy Agency, hundreds of millions of people have gained access to modern energy over the last two decades, especially in China and India. Nevertheless, around a billion people still today do not have electricity. Those energy-starved people stand to benefit most from the natural gas, oil, and coal industries and they deserve to be free to select the most accessible energy sources available. As was the case when North America and the other wealthy parts of the world industrialized, coal tends to provide a great option for those mired in energy poverty. That’s why China is currently building more coal-fired capacity than the entire U.S. coal fleet supplies today. As described above, Poland is now looking to U.S. gas producers to provide it with energy free from the baggage of dealing with the corrupt Russian regime.

Affordable, reliable energy is a vital building block for the material advancement that people in the world’s wealthiest countries enjoy, but one that people in many parts of the world have yet to experience. Natural gas, oil, and coal have proven themselves time and again to be the low-cost, flexible fuels that upstart economies need to get going. Simply put, the natural gas, oil, and coal industries in the U.S. and other free countries are a powerful global force for good.

It is not fossil fuel divestment, but fossil fuel investment that individuals concerned with global health and happiness should embrace.

AEA Launches Initiative Calling on Republican Senators to End Welfare for Auto Manufacturers and Wealthy Coastal Elites

Majority Leader McConnell and GOP Must Stop the Expansion of the Inefficient, Costly and Unfair Electric Vehicle Subsidy

WASHINGTON DC (November 20, 2019) – The American Energy Alliance (AEA) turned their attention on Republican Senators today via the pages of The Wall Street Journal.  In a full-page advertisement, AEA called on Republicans to block the expansion of the unnecessary, inefficient, costly and unfair electric vehicle (EV) tax credit. 

Thomas Pyle, AEA President issued the following statement:

“House Democrats have made expanding the electric vehicle subsidy a top priority before Congress wraps up for the year. This move would essentially enrich two auto companies, GM and Tesla, along with wealthy coastal elites, mainly from California and New York.  It’s now up to the Republicans in the U.S. Senate to stop the madness.  No deals, no extensions.  Majority Leader McConnell and his Senate GOP colleagues must protect consumers and taxpayers by eliminating the electric vehicle tax credit once and for all.  At the very least, they must block the proposed expansion of this welfare program for the wealthy.”

The federal electric vehicle tax credit is a misguided and outdated policy that sends a clear and unavoidable message that we trust government, rather than consumers, to decide what kinds of cars Americans should buy.  The justification for this tax credit was to reduce our dependence on foreign oil.  Today, America leads the world in energy production.  Though the tax credit is no longer needed, special interests in Washington are pushing for lawmakers to extend the manufacturers’ cap.

AEA has repeatedly reminded lawmakers that 78.7 percent of the EV tax credits went to households with an adjusted gross income of $100,000 or higher, and more than half went to households with an adjusted gross income of more than $200,000.  AEA has also done extensive public polling on EV subsidies and identified a clear theme – a majority of Americans don’t believe taxpayers’ money should go towards paying for other peoples’ cars.  Voters’ sentiments against paying for other’s electric vehicles especially sharpen when they learn nearly 50 percent of all subsidies are going to California.
While the tax credit is misguided as a whole, AEA highlights the fact that its original drafters had the foresight to limit it to the first 200,000 electric cars from a given manufacturer. That admirable restraint needs to remain intact.

For media inquiries, please contact Jon Haubert.
[email protected]


Statement on the Nomination of Dan Brouillette as U.S. Secretary of Energy

WASHINGTON DC (November 18, 2019) – Today, Thomas Pyle, President of the American Energy Alliance, issued the following statement in support of the nomination of Dan Brouillette as the new U.S. Secretary of Energy.

“Dan’s exemplary service as Deputy Secretary is proof positive that President Trump has made the right choice in tapping him to take the helm at the Department of Energy. Under President Trump, our nation has come a long way in a short period of time towards securing our energy future. I have no doubt that Dan shares that commitment and will work tirelessly to safeguard our nuclear arsenal and continue to promote freedom molecules around the world.”

Media Contact:
Jon Haubert
[email protected]


Au revoir, Paris

American Energy Alliance celebrates President Trump’s continued leadership on U.S. withdrawal from lopsided climate agreement

WASHINGTON DC (November 5, 2019) – Today, the American Energy Alliance (AEA) cheered the announcement that the Trump administration was making formal steps to withdraw from the Paris Agreement on climate change.
Since nearly the moment it was announced more than four years ago, AEA has been advocating that the United States depart from this ill-advised, misleading, and ineffective arrangement that committed U.S. taxpayers to billions of dollars while doing  virtually nothing to protect the environment.
According to the models of the Intergovernmental Panel on Climate Change (IPCC), the economic costs of cutting greenhouse gas emissions to hit the Paris targets are greater than the expected costs of environmental damage from climate change. This is true when looking at all representative pathways, even the worst-case scenario modeled. In other words, the IPCC consensus science is that compliance with the Paris minimum target of 2 degrees Celsius—let alone the more ambitious 1.5 degrees goal—would be more harmful than the environmental cost of doing nothing.
Furthermore, as evidenced by recent documents uncovered by the watchdog group Government Accountability & Oversight, it was probably unlawful to enter into the treaty in the first place. 
Tom Pyle, President of the American Energy Alliance, issued the following statement in reaction to Secretary of State Michael Pompeo’s announcement:

“President Trump promised to represent Pittsburgh, not Paris. Today, by submitting the formal notification of its withdrawal of the Paris Agreement to the United Nations, the president took another important step towards ending American participation in this costly and unpopular U.N. climate scheme. The Paris Agreement was a bad deal for the U.S. and another in a long line of “America last” energy policies put forward by the previous administration. President Trump stood up to the climate bullies here and across the globe when he promised to withdraw from an agreement with no redeeming value fo the United States. Today was another important step towards fulfilling that promise.” 

For media inquiries, please contact Jon Haubert.
[email protected]


Pittsburgh’s “Clean Energy” Cronies Can’t Hide Behind Mayor Peduto Forever

On Wednesday, President Trump appeared in Pittsburgh to discuss American energy policy and his commitment to withdraw from the Paris Climate Agreement. Following the appearance, Pittsburg’s mayor, William Peduto, issued a press release that made several claims misrepresenting the reality of American energy policy and the current state of the energy industry in Pennsylvania. Two of those claims are worth addressing here.

Claim 1: “President Trump’s remarks on energy and the Paris Agreement today underscore why the 2020 election is so important, not only for the United States but for the world.  The United States cannot officially withdraw from the Paris Agreement until November 2020, so final action will rightly be made by the next President.”

Response: President Trump will remain President until at least January 20, 2021 and he has stated that he remains committed to removing the United States from the Paris Climate Agreement in November just as he previously announced.  If we recognize that politicians are at least partially motivated by their desire to be reelected, it’s not surprising that Mayor Peduto would pair an inaccurate claim like this with an emphasis on the importance of a future election. In fact, because of the press release’s emphasis on the mayor’s policies and their support for the clean energy industry (addressed below), it’s reasonable to interpret the entire press release as the mayor simply reminding those who are dependent on those policies to vote in future elections.

Claim 2: “In Pennsylvania there are twice as many workers employed by the clean energy industry than by fossil fuel producers. There are more clean energy workers in Allegheny County than any other county in the state, including Philadelphia. The plans the City of Pittsburgh has adopted to cut carbon emissions in half are projected to add 110,000 full-time equivalent jobs by 2030.”

Response: These job numbers come from E2, and a recent blog from that organization makes a similar claim: “Since 2014, Pennsylvania has increased its workforce in clean technologies like renewables, energy efficiency, clean vehicles, storage, and grid modernization by nearly 60 percent – employing now twice as many workers as the state’s entire fossil fuel industry. This recent growth over the past several years has put Pennsylvania within 4,400 jobs of overtaking Virginia as the No. 10 state in the U.S. for clean energy employment.” 

Politicians define economic success based on irrelevant metrics like the number of jobs their policies create because they need some way of convincing people that their “contributions” to economic activity are valuable. Unfortunately for Mayor Peduto, his argument only highlights how destructive his clean energy policies actually are. The purpose of economic activity isn’t to create jobs; it is to produce things that people want. Imagine if we organized economic activity in such a way where people’s labor was directed at digging ditches using spoons. This would create a lot of jobs, but no reasonable person would consider that arrangement to be ideal.

Here is a breakdown of end-use energy consumption in Pennsylvania in 2017 (the most recent year data is available): 

And here is a breakdown of the U.S. in 2018:

As you can see, while the clean energy industry might be creating a lot of jobs, the fossil fuel industry is doing all the heavy lifting when it comes to producing reliable and affordable energy that enriches people’s lives. This suggests that a great deal of these clean energy jobs exist simply to meet the guidelines of costly regulations and the state’s alternative portfolio mandate.

Mayor Peduto might argue that these jobs are in research and development and are working to produce the products of the future. That’s all well and good, but since those products have yet to pass a market test, it’s too early to say whether or not these jobs are contributing to anything productive. That leaves us to wonder why the Mayor of Pittsburgh spends time speculating about the future success of certain industries; it’s almost as if he has a vested interest in seeing them succeed.

The fact that the fossil fuel industry produces more energy with less labor is not a trivial matter. Labor is scarce and can only be allocated to solving so many problems at a time. Therefore, we should recognize that the efficiency of the fossil fuel industry is freeing up labor to supply other goods and services in order to meet the other needs of Pennsylvania’s economy. Thank you fossil fuels!

USDA Seeks to Right Past Wrongs in Alaska

After two decades of needless, halted activity, exempting Tongass National Forest from 2001 Roadless Rule right call for Alaska and America

WASHINGTON DC (October 21, 2019) – The American Energy Alliance applauded the United States Department of Agriculture (USDA) today for moving forward on public comment on a draft Environmental Impact Statement for alternatives to a proposed Alaska Roadless Rule.  If adopted, the proposed rule would exempt the 17-million acre Tongass National Forest from the 2001 Roadless Area Conservation Rule which many Alaskans and businesses believe has thwarted the state’s economic development.  Thomas Pyle, President of AEA, made the following statement: 

“Alaska – rich in nearly every natural resource known to mankind – has been stuck in regulatory morass for decades because of past mistakes from previous administrations’ shortsightedness. The Tongass National Forest alone is larger than West Virginia, and its forest is important to the local residents for their livelihoods.  The state has been asking for this for years and it’s great to see an administration finally step up.”

“Whether it’s pipeline protests, offshore drilling, stopping development in or near ANWR, mining, transportation, abusing the Endangered Species Act or the National Environmental Policy Act, environmentalists have thwarted responsible development in Alaska for decades. President Trump is bringing back common sense stewardship that will allow for human uses as well as better management, and making up for so much time lost.  We support and applaud this effort.”

For media inquiries, please contact Jon Haubert.
[email protected]


Key Vote NO on CRA resolution on ACE rule


The American Energy Alliance urges all Senators to oppose the Congressional Review Act resolution on the Affordable Clean Energy (ACE) rule.

The ACE rule was a necessary corrective on the overreaching Clean Power Plan (CPP) from the previous administration.  The CPP asserted entirely new federal powers from the statutory language that had a long-settled interpretation.  As was clear from the CPP’s record in court proceedings, which were so negative that the rule never went into effect, this assertion of new power was unlawful.  The current administration correctly withdrew the unlawful CPP and substituted a replacement which more accurately conforms to the statutory powers of the Environmental Protection Agency.

The AEA urges all members to support free markets and affordable energy by voting NO on the ACE Rule Congressional Review Act resolution.  Should a vote on this resolution occur, AEA will include it in its American Energy Scorecard.