The use of fossil fuels drives climate change. Unfortunately, the path to clean sources of electricity, heat, and transport is impeded by the continued government subsidization of fossil fuels. In our recent Scorecard measuring the US against other G7 countries on progress in eliminating fossil fuel subsidies, the US ranked last, spending over $26 billion a year to prop up fossil fuels. Fossil fuel subsidies waste money and come at the expense of public health, local communities, and the climate.
The US still provides subsidies for fossil fuel exploration, mining, production, and consumption. The US subsidizes more oil and gas production than all other G7 countries combined – nearly $15 billion USD a year, compared to $2 billion for the next highest country, Japan.
Subsidies come in a variety of forms: allowing royalty payments for companies to mine coal from public lands at far below market rates, for example (costing taxpayers more than $30 billion over the last 30 years). Additionally, nearly half of discovered, yet undeveloped, US oil is dependent on subsidies. As an example, in the Williston Basin of North Dakota, 59% of oil resources are subsidy dependent. In the Permian Basin of Texas, 40% of oil resources are subsidy dependent.
The first step to eliminate subsidies is to do a full accounting of those that exist. The US completed a subsidy “peer review” in 2016. While the official US report contained gaps, it did include a list of substantial subsidies in need of reform: $1.6 billion in subsidies for expensing of intangible drilling costs, $966 million in unnecessary write-offs for depletion of oil and gas wells, a domestic manufacturing deduction of $1.0 billion, along with many other subsidies. The next step is to eliminate subsidies: which will require action through Congress. It’s time for lawmakers to phase out government support for fossil fuel production, while ensuring a just transition for workers involved in these industries.
By Terry Oldberg Owner, knowledgetothemax
Ideally, Congress would pursue minimization of the total costs of energy, including the costs, if any, from carbon induced global warming. In reality, currently existing global warming models are not a product of the scientific method of investigation. This shortcoming in the basis for energy policy should be corrected as soon as possible.
By Frank T Manheim Affiliate Professor , George Mason University
Yours is an interesting concept, but I see three problems: 1) the scientific analysis involves estimates of future or hypothetical costs; 2) the rather coldblooded calculation, even if feasible, puts policy at the service of costs, ignoring human and environmental consequences. It is not likely to gain the emotional support of environmentalists – nor conservatives who remain sceptical of warming. 3) Finally, when have you seen the U.S. federal government base controversial policy on disciplined scientific analysis?
By Terry Oldberg Owner, knowledgetothemax
Frank:
Thanks for giving me the opportunity to clarify. For a cost-benefit analysis, the climate models
are a weak point as the scientific method was not used in the construction of these models. This is admitted
in UN-IPCC-AR4 when this document disingenuously states that in the modern era hypothesis testing has been replaced by peer review.
Thus, one of the ways in which a politician can contribute to the welfare of his or her constituents
is to replace the pseudoscientific method now in use by the scientific method. The results frum use of
the latter method would be less costly to obtain and provide a more reliable basis for making energy policy.
Though prone to basing policy in pseudoscience the government has proven itself capable of basing policy in science on many occasions. To continue to base the policy on climate change in pseudoscience has the capacity to cause major damage to our government and its citizens.
By Nathan Taft Research Analyst, Fuel Freedom Foundation
Hi Han!
I actually just wrote a piece on the subsidies the oil industry receives and how it helps lock in their virtual (92% market share) monopoly. Here’s a link to the piece (http://bit.ly/OilCompanySubsidies), and below are some of the main points contained within:
Cheers,
-Nathan Taft
By Frank T Manheim Affiliate Professor , George Mason University
PHASE OUT FOSSIL FUEL SUBSIDIES? YES, BUT NOT THE NRDC’S WAY
Today the U.S. is unique among advanced nations in its degree of internal fragmentation, polarization, and policy gridlock. And it is near the bottom of all advanced nations in the proportion of renewable to total energy use. That’s not because of lack of zeal by environmental activist organizations like the NRDC.
Han Chen’s proposal to phase out fossil fuel subsidies offers a first-class example of how we got into our deeply unsatisfactory performance in the first place. Her prescriptions are straightforward: identify all fossil-fuel subsidies, then stop them – a step that will need Congress.
I’m on board with discontinuing fossil fuel subsidies. The global climate change rationale for this needs no elaboration by me. But Han totally ignores the potential consequences of single-minded action. What about the regions and industry that would be severely impacted? We still import 10 million barrels of petroleum per day – much of it for transportation fuel. If shutting down subsidies has the desired effect of also shutting down petroleum production, would it be a good thing to trade American jobs and economy for imported oil to fill the gap? Filling it through electric cars and other envisaged solutions is well in the future.
The Obama administration was moving as rapidly as it could in renewable energy policy, but unlike advanced European nations, it took a singleminded approach to policy and a hostile attitude to industry. It gave minimal attention to wider consequences and antagonisms aroused by its policies. So what happened? Trump.
Germans and other European leaders in renewable energy performance adopted cooperative rather than unilateral policies. Instead of environmental activists flexing their legal and litigation muscle Greens and industry communicated. It was the Greens who proposed Germany’s brilliantly effective feed-in tariff system for promoting all types of renewable energy development. And industry has been a partner in, not an antagonist to renewable energy policies.
By Jane Twitmyer Principal, CACW|Watts
It seems I answered a lot of these issues in my prior discussion comment, just posted and where I discussed Oil Change International’s analysis …
I think eliminating the $20Billion in annual giveaways to the fossil industries would be the best way to level the playing field with renewable solutions. It would include charging the actual environmental damages back to the perpetrators, and it would include not deducting fines as a legitimate expense. Tax payers have been shortchanged on damages even when money is paid and work done.
Eliminate … My first favorite to is the $2.5B in exploration deduction … Second …
We need to produce less every year, so phase out that $4B coal production tax credit and similar production credits in the oil business.
One rationale to gain support for the eliminations can be to re-budget a certain amount of the reduced expenditure for worker retraining and such. Another set aside could be made for part of the environmental cleanup that is still required, as well as health issues. In WVA miners with diagnosed black lung have had trouble collecting disability. Other sickness ‘hot spots’ are located near toxic emission facilities.
People need to know about this hidden industry support. One tax credit is over 100 years old and was put in place to help build the oil industry. These ‘subsidies’ need to be part of the budget discussion.
By Gary Vesperman Founding Member, New Energy Congress
I have prepared an exhibit – the “Gallery of Clean Energy Inventions”. Here is the current description: The Gallery of Clean Energy Inventions displays profiles of 16 Larger Generators, 29 Smaller Generators, 23 Advanced Self-Powered Electric Vehicle Innovations, 27 Radioactivity Neutralization Methods, 25 Space Travel Innovations, 20 Technical Solutions to Water Shortages, and my own design of a Torsion Field School Network. Also displayed are 26 movie posters and 98 fantastically colorful Hubble Space Telescope images.All of the exhibit files are linked at the top of commutefaster.com/vesperman.html. A shorter version with page numbers but without exhibit setup instructions and movie posters is linked at https://app.box.com/CLEANENERGYEXHIBIT.
I recently learned that deployment of clean energy inventions would also mitigate the enormous water consumption of generators and production of fossil fuels. I can see Lake Mead dropping each year from my front porch. If our severe drought continues the exhibit includes profiles of water solutions that may help southern California survive beyond a few short more years.
The US government budgets zero subsidies for a comprehensive proactive program to discover, evaluate, develop and commercially deploy clean energy inventions. Would it be too sensible to set aside 1% of fossil fuel subsidies for clean energy inventions?
Gary Vesperman, Sierra Club member since 1970
588 Lake Huron LaneBoulder City, Nevada 89005-1018702-435-7947
padrak.com/vesperman
By Scott Sklar President, The Stella Group, LTD
Energy subsidies should not be utilized to support mature industries, in mature markets with mature technologies. The annual $15 billion of taxpayer subsidies are just a tip of the iceberg on what US taxpayers and consumers pay. The irony is that Congress is phasing out the wind energy production credit (a much younger industry) while maintaining the fossil credits(our oldest energy industry). This behavior distorts the market place in several ways, while it also incurs costs for consumers on the waste, water, emissions clean up and health care that is not subsidized. So the ratepayer and consumer pays both ways and limits competition in the marketplace. This is bad public policy all around. Bad economics, and basically “pay for” politics – rich industries feeding at the public trough. What’s sad is that the Congressional majorities from both parties claim there are no fossil subsidies, when the opposite is true. Why corporate America and the general public stand for this charade has always been a mystery to me, but “might makes it right”. There have been more than 35 studies on energy subsidies over the last decade and all raise the issue of fossil and nuclear subsidies, and Congress has never addressed the issue forthrightly. While I applaud the discussion, no change politically to change the situation is possible.