What You Need to Know About Fossil Fuel Subsidies

BY ON October 12, 2017

Some things don’t change. Government handouts to fossil fuel companies have been with us for over a century. Now, with an administration that is riddled with shills for those industries, the American public is at even greater risk.

Oil Change International has come out with a new report: “Dirty Energy Dominance: Dependent on Denial.” Within its forty pages, it takes on a range of topics from the massive donations given to elected officials to maintain the status quo, to the federal subsidies raked in by fossil fuels compared to the renewable energy sector (seven-to-one).

fossil fuel subsidies chart

A section outlines the Trump cabinet officials who are driving an agenda that reflects their ideological and financial concerns. Ryan Zinke (Interior), Scott Pruitt (EPA), and Rick Perry (Energy) form a troika of disaster. The conflicts of interest are massive, leaving our public lands and health in the crosshairs.

The findings make clear that ending these subsidies is essential to putting the brakes on the Trump fossil fuel blueprint. As shown in the report, “The industry heavily relies on government giveaways to remain profitable.” Publicly disclosed stats showed that during the election cycle of 2015-2016, $354 million went to campaigns and “lobbying expenditures.” Republicans were the beneficiaries of 88 percent of these fiscal contributions.

During 2015-2016, the federal government awarded $29.4 billion in subsidies to the fossil fuel sector. The report states, “For every $1 that fossil fuel companies spent on lobbying and campaign finance contributions to Congress, it received more than $83 back in subsidies — an almost 8,200 percent return.”

There are monies available to bail out the coal industry, while those companies fail to take responsibility for the health of its workers. Oil corporations deduct “oil spill penalty costs,” while writing off legal settlements as the cost of doing business.

The graph that said it all was the Selected Program Cuts in the President’s Budget FY2018 vs. Annual Federal Fossil Fuel Subsidies. Comparing the Trump budget cuts for FY2018 with the funds allotted to subsidies is infuriating. Millions of dollars eliminated from social programs (including the demise of the EPA Environmental Justice department) to help sustain coal, oil, and gas is clearly unjustifiable.

fossil fuel subsidies chart fy 2018

Unfortunately, these subsidies occur at the state level as well. The study looked at sixteen states, breaking down their respective scenarios. I learned that California, despite being a frontrunner on environmental initiatives, is a “major oil and gas producing state with big industry giveaways.” I wasn’t surprised that in Oklahoma, home of Scott Pruitt and Sen. James Inhofe (where handouts to oil and gas are the order of business), “lawmakers slashed $109 million in public school funding, leading to shortened school weeks for students across the state.” The purpose was to ameliorate huge budget gaps.

Going beyond detailing the issues, proactive responses to the problem are presented:

  • Repeal existing tax breaks for fossil fuel exploration and production through legislative action.
  • Let tax credits for carbon capture and storage and enhanced oil recovery expire in 2018, while stopping actions to extend and expand this subsidy.
  • Call for legislation that will terminate investment in fossil fuel expansion while creating renewable job sector opportunities for displaced workers.
  • Protect public resources from fossil fuel companies and their allies, and demand that current public health protections remain in place.

It is possible to push back, and it needs to start at the hyperlocal level. In New York, State Senator Liz Kruger and Assemblymember Kevin Cahill have co-sponsored a bill they said would “tackle counterproductive state fossil fuel subsidies, shining a light on and potentially halting tax breaks, credits and refunds for the use of dirty fossil fuels.” The bill is groundbreaking; the first piece of legislation introduced at the state-level with the objective of going after fossil fuel tax subsidies while creating transparency with a “public review process.”

I reached out to Sen. Kruger for her feedback on the proposal. She wrote via e-mail, “Since climate change is a global problem, it can seem insurmountable, as if only international cooperation on a global scale can make a difference. However, though national and international action is vital, it is important for all of us to look at what is going on in our own backyards. In New York State, we have laudable goals for greenhouse gas emissions reductions, yet we are spending $1.5 billion each year to encourage dirty fossil fuel use. We need to take a very hard look at where that money is going.”

Janet Redman, U.S. Policy Director of Oil Change International and principal author of the report, reiterated that view when we spoke by telephone.

“The fact that the U.S. federal and state governments handout billions to oil, gas, and coal companies each year is a critical issue for all Americans. Every taxpayer dollar wasted subsidizing this industry takes us further from a stable climate and protecting our families from disasters made worse by climate change.

There is something we can do now. Moms, dads, grandparents, aunts and uncles – They can urge their elected officials not to take money from the fossil fuel industry. Then our lawmakers won’t be beholden to polluters when it’s time to make decisions about how to invest our public dollars wisely, responsibly, and sustainably.”

Editor’s note: Scott Pruitt just announced that he wants to eliminate tax credits for wind and solar power.

Graphs: Courtesy of Oil Change International






TOPICS: Clean Air Rules and Regulations, Climate Change, Economics, Politics