S ince the 1970s, policymakers have increasingly used the tax code to promote energy policy goals. Long-term energy policy goals include providing a secure supply of energy, providing energy at a low cost, and ensuring that energy production and consumption is consistent with environmental objectives. A range of federal policies, including various research and development programs, mandates, and direct financial support such as tax incentives or loan guarantees, promote various energy policy objectives. This report focuses tax incentives that support the production of or investment in various energy resources. Through the mid-2000s, the majority of revenue losses associated with energy tax incentives have resulted from provisions benefitting fossil fuels. At present, the balance has shifted, such that the bulk of federal revenue losses associated with energy tax provisions are from incentives for renewable energy production and investment. While costs associated with energy tax policy have shifted towards incentives that promote renewable energy, the majority of domestic energy produced continues to be from fossil energy resources. This has raised questions regarding the value of energy tax incentives relative to production, and the relative subsidization of various energy resources. This report provides background information that might be useful as Congress continues to evaluate current energy tax policy. Specifically, the report presents a comparison of the cost of tax incentives associated with fossil and renewable energy resources, relative to amount of energy produced using each type of resource. The report also reviews other analyses that compare the cost of energy tax incentives relative to production, across different types of energy technologies. Although the numbers in this report may be useful for policymakers evaluating the current status of energy tax policy, it is important to understand the limitations of this analysis. This report evaluates energy production relative to the value of current energy tax expenditures. It does not, however, seek to analyze whether the current system of energy tax incentives is economically efficient, effective, or otherwise consistent with broader energy policy objectives. Further, analysis in this report does not include information on federal spending on energy that is not linked to the tax code. The following sections estimate the value of tax incentives relative to the level of energy produced using fossil and renewable energy resources. Before proceeding with the analysis, some limitations are outlined. The analysis itself requires qu antification of energy production and energy tax incentives. Once data on energy production and energy tax incentives have been presented, the value of energy tax incentives can be evaluated relative to current levels of energy production. The analysis below provides a broad comparison of the relative tax support for fossil fuels as compared to the relative support for renewables. Various data limitations prevent a precise analysis of the amount of subsidy per unit of production across different energy resources. Limitations associated with this type of analysis include the following: Current-year tax incentives may not directly support current-year production Many of the tax incentives available for energy resources are designed to encourage investment, rather than production. For example, the expensing of intangible drilling costs (IDCs) for oil and gas provides an incentive to invest in capital equipment and exploration. Although the ability to expense IDCs does not directly support current production of crude oil and natural gas, such subsidies are expected to increase long-run supply. Differing levels of federal financial support may or may not reflect policy rationale s Various policy rationales may exist for federal interventions in energy markets. Interventions may be designed to achieve various economic, social, or other policy objectives. Although analysis of federal financial support per unit of energy production may help inform the policy debate, it does not directly consider why various energy sources may receive different levels of federal financial support. Tax expenditures are estimates The tax expenditure data provided by the Joint Committee on Taxation (JCT) are estimates of federal revenue loss associated with a specific provision. These estimates do not provide information on actual federal revenue losses, nor do these estimates reflect the amount of revenue that would be raised should the provision be eliminated. Tax expenditure data are not specific to energy source Many tax incentives are available to a variety of energy resources. For example, the tax expenditure associated with the expensing of IDCs does not distinguish between revenue losses associated with natural gas versus those associated with oil. The tax expenditure for five-year accelerated depreciation also does not specify how much of the benefit accrues to various eligible technologies, such as wind and solar. A number of tax provisions that support energy are not energy specific The U.S. energy sector benefits from a number of tax provisions that are not targeted at energy. For example, the production activities deduction (§ 199) benefits all domestic manufacturers. For the purposes of the § 199 deduction, oil and gas extraction is considered a domestic manufacturing activity. Certain energy-related activities may also benefit from other tax incentives that are available to non-energy industries, such as the ability to issue tax-exempt debt, the ability to structure as a master limited partnership, or tax incentives designed to promote other activities, such as research and development. The Energy Information Administration (EIA) provides annual data on U.S. primary energy production. EIA defines primary energy as energy that exists in a naturally occurring form, before being converted into an end-use product. For example, coal is considered primary energy, which can be converted to synthetic gas and later electricity. This report relies on 2013 data on U.S. primary energy production (see Table 1 and Figure 1 ). Coal and natural gas are the two largest primary energy production sources, representing 24.4% and 30.5% respectively of primary energy production in 2013. Crude oil constituted 19.3% of primary energy production. Taken together, fossil energy sources were used for 78.5% of 2013 primary energy production. The remaining U.S. primary energy production is attributable to nuclear electric and renewable energy resources. Overall, 10.1% of 2013 U.S. primary energy was produced as nuclear electric energy. Renewables (including hydro-electric power) constituted 11.4% of 2013 U.S. primary energy production. Excluding hydro-electric power, renewable energy resources constituted approximately 8.2% of primary energy production in 2013. Biomass was the largest source of production amongst the renewables in 2013, accounting for 5.6% of overall primary energy production or nearly half of renewable energy production. This was followed by hydro-electric power at 3.1% of primary energy production. The remaining three resources, wind, geothermal, and solar were responsible for 1.9%, 0.3%, and 0.4% of 2013 primary energy production, respectively (see Table 1 and Figure 1 ). Primary energy produced using biomass can be further categorized as biomass being used to produce biofuels (e.g., ethanol) and biomass being used to generate biopower. Of the 4.6 quadrillion Btu of energy produced using biomass, about 2.0 quadrillion Btu, or 43.4%, was used in the production of biofuels. , The tax code supports the energy sector by providing a number of targeted tax incentives, or tax incentives only available for the energy industry. In addition to targeted tax incentives, the energy sector may also benefit from a number of broader tax provisions that are available for energy and non-energy-related taxpayers. These broader tax incentives are not included in the analysis, since tax expenditure estimates do not indicate how much of the revenue loss associated with these generally available provisions is associated with energy-related activities. Joint Committee on Taxation (JCT) tax expenditure estimates are used to tabulate federal revenue losses associated with energy tax provisions. The tax expenditure estimates provided by the JCT are forecasted revenue losses. These revenue losses are not re-estimated on the basis of actual economic conditions. Thus, revenue losses presented below are projected, as opposed to actual revenue losses. The JCT advises that individual tax expenditures cannot be simply summed to estimate the aggregate revenue loss from multiple tax provisions. This is because of interaction effects. When the revenue loss associated with a specific tax provision is estimated, the estimate is made assuming that there are no changes in other provisions or in taxpayer behavior. When individual tax expenditures are summed, the interaction effects may lead to different revenue loss estimates. Consequently, aggregate tax expenditure estimates, derived from summing the estimated revenue effects of individual tax expenditure provisions, are unlikely to reflect the actual change in federal receipts associated with removing various tax provisions. Thus, total tax expenditure figures presented below are an estimate of federal revenue losses associated with energy tax provisions, and should not be interpreted as actual federal revenue losses. Table 2 provides information on revenue losses and outlays associated with energy-related tax provisions between 2010 and 2014. In 2010, the tax code provided an estimated $20.0 billion in support for the energy sector. In 2011, the estimated amount was $22.7 billion. In 2012, the estimated amount was $24.2 billion. Between 2011 and 2012, the cost of excise tax credits for alcohol fuels fell, as the primary tax incentives for ethanol were allowed to expire. Increased outlays for Section 1603 grants, however, served to partially offset this decline. In 2013, the tax code provided an estimated $23.3 billion in support for the energy sector. More than a third of the 2013 total, $8.1 billion, was due to the Section 1603 grants in lieu of tax credits for renewables. In 2014, the estimated amount of tax-related financial support for the energy sector was $16.7 billion. The two largest energy-related provisions, in terms of federal revenue loss, over the 2010 through 2014 period, expired at the end of 2011. Between 2010 and 2014, the Section 1603 grants in lieu of tax credits program cost $24.0 billion. Over the same time period, excise tax credits for alcohol fuels cost $15.8 billion. The expiration of a number of energy-related tax incentives means that, under current law, a substantial shift in balance of energy tax incentives across different types of energy resources is projected to occur (see the section " Energy Tax Incentive Trends " below).