Fossil Fuels Still Getting Huge Subsidies. Not Enough. They Want More.

August 7, 2017

frackwells2

Not just your money. Your Land.

Guardian:

A study was just published in the journal World Development that quantifies the amount of subsidies directed toward fossil fuels globally, and the results are shocking. The authors work at the IMF and are well-skilled to quantify the subsidies discussed in the paper.

Let’s give the final numbers and then back up to dig into the details. The subsidies were $4.9 tn in 2013 and they rose to $5.3 tn just two years later. According to the authors, these subsidies are important because first, they promote fossil fuel use which damages the environment. Second, these are fiscally costly. Third, the subsidies discourage investments in energy efficiency and renewable energy that compete with the subsidized fossil fuels. Finally, subsidies are very inefficient means to support low-income households.

Interested readers are directed to the paper for further details, but the results are what surprised me. Pre-tax (the narrow view of subsidies) subsidies amount to 0.7% of global GDP in 2011 and 2013. But the more appropriate definition of subsidies is much larger (8 times larger than the pre-tax subsidies). We are talking enormous values of 5.8% of global GDP in 2011, rising to 6.5% in 2013.

The authors also broke the results down by fossil fuel type and usage (coal, petroleum, natural gas, electricity). It is not clear to me how the authors separated the various fuel sources out of electrical generation; however, the results show that petroleum and coal receive much larger subsidies compared to their counterpart fuels. The authors organized results by geographical region and found that the top three subsidizers of fossil fuels are China, USA, and Russia, respectively. The European Union is a bit less than half of the entire US subsidy. Other notable countries and regions are discussed.

There are two key takeaway messages. First, fossil fuel subsidies are enormous and they are costs that we all pay, in one form or another. Second, the subsidies persist in part because we don’t fully appreciate their size. These two facts, taken together, further strengthen the case to be made for clean and renewable energy. Clean energy sources do not suffer from the environmental costs that plague fossil fuels.

In addition to outright subsidies and sweetheart tax deals, the Trump/Putin administration is currently considering which publicly owned National Monuments,  the Crown Jewels of American’s heritage, should be turned over to big corporate benefactors for exploitation.

New York Times:

President Trump, along with roundly questioning climate change, has moved quickly to wipe out those measures with the support of coal companies and other commercial interests. Separately, Mr. Trump’s Interior Department is drawing up plans to reduce wilderness and historic areas that are now protected as national monuments, creating even more opportunities for profit.

Richard Reavey, the head of government relations for Cloud Peak Energy, which operates a strip mine here that sends coal to the Midwest and increasingly to coal-burning power plants in Asia said Mr. Trump’s change of course was meant to correct wrongs of the past.

During President Barack Obama’s second term, the coal industry’s chief antagonist was Sally Jewell, a former oil industry engineer appointed Interior secretary in 2013. Ms. Jewell, an avid hiker, had also served as chief executive of the outdoor gear company REI.

She saw mining companies as a particular problem because they too often left behind polluted mine pits and paid too little for coal leases on federal land.

Starting two years ago, Ms. Jewell took a series of steps to change the relationship between coal companies and the federal government. She imposed a moratorium on new federal coal leases while beginning a three-year study of the industry’s environmental consequences. More than 40 percent of all coal mined in the United States comes from federal land, and when burned it generates roughly 10 percent of the country’s total greenhouse gas emissions.

In addition, she called for greater transparency in the awarding of coal leases, and she backed an increase in the royalty paymentsmade to operate coal mines on public lands.

“The corruption in the coal sector is just so rampant,” she said in an interview.

A central problem, she said, was the lack of competitive bidding for mining leases: Only 11 of the 107 sales of federal coal leases between 1990 and 2012 received more than one bid, according to a report by the Government Accountability Office. A second study, by a nonprofit think tank, estimated that the practice had shortchanged taxpayers tens of billions of dollars.

Another hot-button issue was how much to charge in royalties, which generate about $1 billion a year for the federal government.

Under federal rules adopted in 1920, coal companies are required to pay “not less than” 12.5 percent on sales of surface coal mined on federal lands. But for years, studies indicate, the companies paid far less — as little as 2.5 percent of the ultimate sale price — because they often negotiated large royalty discounts with sympathetic federal officials. Companies also often sell coal first to a corporate affiliate at a sharply reduced price, before reselling it to the intended customer, costing the government a chunk of its royalties, according to theGovernment Accountability Office study. The technique was particularly popular among mines with foreign buyers.

High Country News:

Interior Secretary Ryan Zinke is three months into a review of 27 national monuments to determine whether they should be shrunk, abolished or left intact. Zinke’s review comes as he continues to fill his department with pro-industry officials and amid a broader push at the Interior Department for increased energy development on public lands — something monument designations can work against.

A new website made public on Tuesday describes an Interior Department now mainly led by employees from extractive-industry backgrounds, marking clear priorities for Zinke that do not bode well for greater public land protections. The website, created by the Western Values Project, a progressive organization, shows close ties between high-ranking staffers and industry. Of the known political hires to the Interior thus far, 21 come from resource extraction industries, while only three are from “conservation, outdoor recreation, or hunting and fishing backgrounds,” says Chris Saeger, executive director of Western Values Project.

For example, Scott Angelle, now the director of Zinke’s Bureau of Safety and Environmental Enforcement, received donations from energy companies such as Chevron, Energy Transfer Partners (the company behind the Dakota Access Pipeline) and Occidental Petroleum Corporation, during political campaigns. In his new job, Angelle will inspect and regulate offshore oil and gas production. Several Interior appointees have worked for Americans for Prosperity, a far-right advocacy group funded by the Koch brothers, known for their support of fossil fuel industries. Deputy Interior Secretary David Bernhardt is a former lobbyist for oil, gas and mining interests, the report points out.

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4 Responses to “Fossil Fuels Still Getting Huge Subsidies. Not Enough. They Want More.”


  1. Just one thing to say….I hate these bastards. 😦

    • dumboldguy Says:

      You’re not alone in thinking that these people are bastards—-I would go beyond that to say that they are filthy, sick, greedy, lying, and evil spawn of the devil that should have a biblical plague descend upon them.

      It’s good to let the hate out though, Nicole. You might want to paint a Trump face on a sandbag and whack it with a baseball bat or something like that. When I go to the range, I imagine that various Repugnants are in my sights, and get some small relief from blasting holes in Turdle Face McConnell, Ted Crudz, Lamer Smith, Snowball-for-a-brain Jim Inhofe, and others, including some VERY VERY HUUUUGE holes in the one that no one believes because he lies so much.

  2. Gingerbaker Says:

    Paper is behind a paywall. This is how it describes the “subsidies”:

    ” Undercharging for global warming accounts for 22% of the subsidy in 2013, air pollution 46%, broader vehicle externalities 13%, supply costs 11%, and general consumer taxes 8%. China was the biggest subsidizer in 2013 ($1.8 trillion), followed by the United States ($0.6 trillion), and Russia, the European Union, and India (each with about $0.3 trillion).”

    I have no idea what they are talking about, but what they do say does not match what I would call a subsidy.

    • dumboldguy Says:

      This makes a bit more sense, but a bit of googling shows that there are some apples and oranges in there—the “social cost” of carbon is hard to really pin down and quantify, and that’s where the “undercharging for global warming” and “air pollution” apparently fit in—those pesky “externalities”.

      https://en.wikipedia.org/wiki/Energy_subsidies


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