Let’s Talk Vocab: Incentives vs. Subsidies

I love words. Perhaps it’s a trait acquired from my innate passion for books of all kinds, or maybe even from my years of Latin study, during which deciphering the root of unknown words essentially became a hobby. It could stem from my love of inking words to a page, or even orating complex speeches. Wherever the origin, the fact remains that my brain has an extensive inner dictionary and thesaurus. While it is most definitely a blessing, it also has a downside, because I can immediately flag words that are used incorrectly.

Unfortunately, over the past few months, I have noticed the same two words being used erroneously again and again. I thought I would use this outlet to set the record straight and definitively define two words that are constantly thrown around in the realm of clean energy: “incentive” and “subsidy”.

Wait, aren’t they the same? Or at the very least, aren’t they synonyms? Nope.

Let’s dive in, shall we?

An “incentive” is defined by my trusty Merriam Webster Dictionary (yes, I still have a paper copy and I always will) as “something that incites or is likely to incite to determination or action”. For my fellow Latin scholars, it is from the root word “incentivum”, meaning “something that sets the tune or incites”. According to the more modern online platform, it is defined as “a thing that motivates or encourages one to do something”. Synonyms include induce, motivate, spur, goad, and encourage. In absolutely no dictionary or thesaurus that I perused, tangible or online, was the word “subsidy” included as a synonym.

Now let’s shift gears and focus on “subsidy”, from the Latin root “subsidium” meaning “assistance”. A subsidy is defined by Merriam Webster as “…support, assistance” and online as “a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive”. Synonyms include aid, assistance, handout, help, and contribution. Again, I could find no thesaurus that listed “incentive” as a synonym.

Why? Because they are different words, with fundamentally different meanings.

And yet, sadly the true meaning of these words has become muddled, especially when it comes to clean energy. A week doesn’t go by when I don’t hear something along the lines of “solar is only successful because it’s subsidized”.

The majority of the time, this is referring to the renewable energy rebates offered through the NH Public Utilities Commission (PUC). In reality, these rebates are incentives to encourage renewable energy proliferation, not subsidies. Inspect the first page of the residential solar application, and you’ll find the following language “Any New Hampshire homeowner seeking an incentive…”, and you have even more evidence that the rebate programs are intended to incentivize renewable energy, not merely subsidize it.

Not convinced yet? Let’s dive deeper.

The incentives for investing in renewable energy projects are one-time payments, intended to induce action. If we shift our focus to the national subsidies for the fossil fuel industries, we uncover that the federal government spends $37.5 billion every year supporting the same fossil fuel activities. There is no motivation for actions to change, merely the same or even increased amounts of money forked over as subsidies so these industries can stay afloat. A single $2500 incentive to motivate a homeowner to invest in solar panels is quite different than millions of dollars given annually to subsidize costly fossil fuel production.

Dictionaries don’t lie, regardless of political affiliation or how one feels about clean energy. The facts are clear: “incentives” and “subsidies” are not the same thing. Be wary of any argument you hear involving clean energy receiving subsidies from the state, and feel free to break out your handy dandy pocket dictionary, thesaurus, or Latin flashcards if the need arises.