Guest essay by Eric Worrall
An economic model based study has suggested that removing oil and gas tax breaks would have a modest impact on global emissions, falling far short of Paris pledges.
New Study Finds Cutting Oil Subsidies Will Not Stop Climate Change
The effect of removing fossil fuel subsidies would fall far short of the reductions promised in the Paris Agreement
Ending financial assistance for fossil fuel companies has long been discussed as a tactic to reduce greenhouse gas emissions and encourage investment in renewables. Oil, natural gas and coal companies worldwide receive hundreds of billions of dollars each year in tax breaks or other subsidies—and some experts argue that cutting them off would drive prices up and consumption down.
It’s a simple idea, but one that’s been sparsely investigated by scientists. Now, new research suggests that removing fossil fuel subsidies might not have the global effect that some climate advocates were hoping for.
The study, published yesterday in the journal Nature, used an ensemble of five models to investigate the impact of ending fossil fuel subsidies worldwide by the year 2030, assuming both high and low oil prices in the future. Doing so would have a modest impact on global greenhouse gas emissions, the research finds, cutting carbon dioxide emissions by a half-billion to 2 billion metric tons annually.
…
In other words, the effect of removing fossil fuel subsidies would fall far short of the reductions promised in the Paris Agreement—which many experts calculate are still not enough to stay within the desired 1.5- or 2-degree-Celsius temperature target.
“I think this will be surprising news to some people, because folks had just imagined that if you did subsidy reform, that would be beneficial to climate,” said David Victor, co-director of the Laboratory on International Law and Regulation at the University of California, San Diego, who was not a part of the new study. “But nobody had actually worked out the analysis, and that’s the contribution of this paper.”
…
“The effect is really limited regionally,” said lead study author Jessica Jewell, a research scholar at the International Institute for Applied Systems Analysis. “In the future, when we talk about subsidy removal, we really need to focus our efforts on oil and gas exporting regions.”
And if subsidy reform is broached in developing regions, she added, it should be discussed alongside “supportive policies to support those lower-income folks.”
…
The abstract of the study;
Limited emission reductions from fuel subsidy removal except in energy-exporting regions
Jessica Jewell, David McCollum, Johannes Emmerling, Christoph Bertram, David E. H. J. Gernaat, Volker Krey, Leonidas Paroussos, Loïc Berger, Kostas Fragkiadakis, Ilkka Keppo, Nawfal Saadi, Massimo Tavoni, Detlef van Vuuren, Vadim Vinichenko & Keywan Riahi
Hopes are high that removing fossil fuel subsidies could help to mitigate climate change by discouraging inefficient energy consumption and levelling the playing field for renewable energy. In September 2016, the G20 countries re-affirmed their 2009 commitment (at the G20 Leaders’ Summit) to phase out fossil fuel subsidies and many national governments are using today’s low oil prices as an opportunity to do so. In practical terms, this means abandoning policies that decrease the price of fossil fuels and electricity generated from fossil fuels to below normal market prices. However, whether the removal of subsidies, even if implemented worldwide, would have a large impact on climate change mitigation has not been systematically explored. Here we show that removing fossil fuel subsidies would have an unexpectedly small impact on global energy demand and carbon dioxide emissions and would not increase renewable energy use by 2030. Subsidy removal would reduce the carbon price necessary to stabilize greenhouse gas concentration at 550 parts per million by only 2–12 per cent under low oil prices. Removing subsidies in most regions would deliver smaller emission reductions than the Paris Agreement (2015) climate pledges and in some regions global subsidy removal may actually lead to an increase in emissions, owing to either coal replacing subsidized oil and natural gas or natural-gas use shifting from subsidizing, energy-exporting regions to non-subsidizing, importing regions. Our results show that subsidy removal would result in the largest CO2 emission reductions in high-income oil- and gas-exporting regions, where the reductions would exceed the climate pledges of these regions and where subsidy removal would affect fewer people living below the poverty line than in lower-income regions.
Read more (paywalled): https://www.nature.com/articles/nature25467
What a shocker. All those high level green campaigns to remove tax breaks for fossil fuels, yet nobody bothered to run the numbers on whether those tax breaks make a significant difference to demand for reliable, affordable energy.
I was interested until I noticed it was from Scientific American. I have been aghast of late by what is printed in that once august journal. However, duty obliges…
Ah… the other shoe I was waiting to hear drop:
The findings help reaffirm the idea that effectively tackling climate change “requires an incentive directly focused on the problem, which is emissions,” Victor said. More targeted approaches to reducing greenhouse gases include carbon pricing—not just removing financial incentives for fossil fuels, but actually taxing them—or stringent emissions caps.
The David mentioned in the article and above quote was: David Victor, co-director of the Laboratory on International Law and Regulation at the University of California, San Diego, who was not a part of the new study.
What they will be proposing now are “negative subsidies”.
Those so called tax breaks are the same tax breaks that all companies get. What they are talking about is new taxes on oil and gas, not eliminating subsidies.
Liars! Liars! Liars!
These filthy lairs need to be called out every time they call a tax deduction a subsidy. A subsidy is when a company receives more in handouts than they pay in taxes. ‘Sustainable’ energy subsidies generally are NOT offset in the least by taxes they pay, since they generally run at a loss.
Allowing people or companies to keep money they earned is NOT a subsidy!
And what subsidies are they referring to that aren’t paid by the end user in taxes?
They seem to be talking about various oil states that gain substantial national income from exports, and use the proceeds to subsidize local consumption. There are at least a few of these in the Mideast, Saudi Arabia and the Gulf States come to mind.
They also talk about low-income states. The economic smoking crater known as Venezuela is a good example.
They always talk about Oil and Gas Subsidies as if “Western” governments were paying them. Or they see Oil and Gas companies getting tax deductions for expenses – just like any other company – and call them subsidies.
Removing the former will have no effect on any of the major oil&gas-consuming nations because the only meaningful subsidies are paid by oil&gas-producing countries to their own citizens. Removing the latter would ……. well, let’s just say that only an economic illiterate could propose it and the outcome wouldn’t be pretty for anyone.
A while back I was driving in Chacao, an upscale district in Caracas, and got stuck behind a truck which drives around the city advertising movies or the opening of a new rock band at a trendy night club. That business is made possible by the price of gasoline and diesel, which is essentially free (the tip to the gas station attendant is more than the charge for gasoline).
Lately things are much worse, that truck doesn’t make the rounds, there’s long lines at gas stations, and people are starving or dying from lack of medicines. Blackouts are common, crime is out of control, stores are empty, the regime leads mobs in looting sprees, there’s almost no public transport anymore. Let’s just say it’s a very fluid situation.
Venezuela is a good example of what goes on when communists take over a country. As far as I can tell they are worse than Nazis. Guys like Castro, Pol Pot and other communistdint leaders didn’t get to murder millions because they didn’t rule tens of millions of highly disciplined Germans building panzers and planes. However, Stalin and Mao killed tens of millions in enormous genocides. Which makes me wonder how come we see people openly admitting they are communists and they don’t get bombed to hell before they can cause more damage. Why did the USA elite applaud Obama when he went to hobnob with Castro? What’s wrong with them? Are they that dumb?
Castro and PolPot ruled over populations that only measured in the millions to 10’s of millions.
Agree – As far as I know, there are very few ‘subsidies’ that are not the same kind of expense any other business would simply treat as a business expense (depreciation, resource depletion, etc). There is no inherent reason the oil patch should be treated any differently.
Royalties paid to a state? Simply a cost of doing this business just like any other mining operation.
Depletion allowance – reflects the cost or moving equipment to other locations or selling it.
Waiver of taxes (any or all) as an incentive to get the business to locate in a state? Lots of other businesses also get this incentive – it creates income for the state in the form of jobs(wages)
There is nothing worse for an economy than a state or federal government picking winners and losers. That is the action of a monopoly (in this case the state) and is an artificial restriction of the Law of Supply and Demand. BAD economic policy!
It’s claimed to create income for the state. In reality, they rarely do, and even then, not much and not for long.
A subsidy allows consumers to pay less for a fossil fuel than it cost to produce. Exactly what is and isn’t a subsidy can be quite confusing. The only remaining US subsidies (tax breaks) were passed after the gas shortage in the 1970’s and they were intended to promote development of new domestic sources of petroleum. Until about 2000, the low price of petroleum meant that these tax breaks mostly went unused. As prices rose afterwards, they stimulated the development of fracking (for both oil and natural gas) and deeper wells in the Gulf of Mexico. Given that we are nearly self-sufficient in petroleum, these subsidies help develop new technologies, but probably don’t make any sense today.
Saudi Arabia charges international oil companies high taxes and low royalties so that companies can get full credit for the foreign taxes they pay charge higher royalty payment against gross income. A report by the Environmental Law Institute in the early 2000’s reported this as the largest subsidy to the fossil fuel industry. Other expenses that non-fossil fuel companies can subtract from gross income were considered to be subsidies to fossil fuel companies. Expensing payments to a fund for miner with black-lung disease was also called a subsidy to coal companies. Almost none of these are subsidies in the traditional sense of the word. If you call the tax breaks “subsidies”, then most large businesses in the country receive subsidies.
The subsidies for renewable energy are direct payments from the government to a company.
The USA didnt subsidize gas and oil in the 1970’s. I know because I was working in the US oil patch in those days. We had price controls which limited our ability to increase production from old wells. Federal gas price controls were draconian, this also limited the ability to drill wells for the interstate market. Eventually, during the Reagan presidency, the oil price controls were removed. I’m not sure when prices for gas were freed from controls, because my job changed. But I can assure you any tax breaks we could consider were more than offset by the price controls. Those killed a lot of oil wells which never got to produce again.
fernandoleanme:
“The Nonconventional Fuels (Section 29) Tax Credit went into effect in 1980, following energy shortages and deep concern about American dependence on imported oil. Congress sought to encourage production of oil and natural gas from “nonconventional” sources, such as Devonian shale, tight formations, and coalbeds. These deposits are unusually expensive to produce.”
http://www.ipaa.org/wp-content/uploads/2016/12/2005-02-Nonconventional-Fuels-Tax-Credit.pdf
The report below lists a wide variety of subsidies for fossil fuels available in the 2000’s. The authors of this report used a very broad definition of the term “subsidy”. Many of the items may not fit your definition of a subsidy. This report is the source of many of the extravagant claims about subsidies.
That is the question – WHAT SUBSIDIES?
Do these authors know anything about the oil and gas business? I doubt it.
Every time I have seen reference to “subsidies” for the fossil fuel industry, they fall into two categories:
1. Absolutely normal depreciation and depletion allowances that are the norm for any resource business = NOT subsidies.
2. Artificially low fuel prices that a few oil-producing countries use to make fuel prices cheaper for their own citizens = REAL subsidies.
In general, fossil fuel royalties and taxes (or production sharing contracts) provide the funds needed to run the whole country. Canada falls into this category, as do several other oil-and-gas-rich states. Almost every province in Canada relies upon huge transfer payments from Alberta to support their bloated civil service.
You have to think like a greenie. I have seen one list of subsidies to oil companies that included:
1. Cost of US Military defending Middle East oil. (As if we would not defend Europe’s oil even if we didn’t need Middle East oil at the time.)
2. Cost of subsidies to help low income people afford heat.
Those are the only two I recall from that particular piece of greenie BS.
thanks
JK
Yes! It is the time poor people pay the full public transportation cost! No more subsidies!
WHAT SUBSIDIES? ……. Here are two prime examples ……..
“Coal Severance Tax
While not every county in West Virginia produces coal, all counties receive a severance tax paid by the coal industry. This additional tax on coal is collected by the State Tax Commissioner and transferred into a special fund within the State Treasurer’s Office.
Oil & Gas Production Tax
The State of Alaska imposes a production tax, under AS 43.55, on oil and gas produced in the state. The current tax rate of 35% was set in 2013 by Senate Bill 21 (commonly known as the More Alaska Production Act or “MAPA”). The tax is based on the net value of oil and gas, which is the value at the point of production, ”
eritas
North Dakota has a 5% gross tax on production of oil. The also tax on gas production. So much for tax breaks. I don’t know what Montana rates are but they are high enough that the oil companies are not interested in drilling the Bakken oil that is there. Considering the oil companies drill in North Dakota are right up against the North Dakota/Montana border.
Those ‘subsidies’ are ‘tax breaks’. That is : somewhat less tax is paid than otherwise would have been paid. As we all know greens and their bedfellow socialists consider anybody who pays less tax than they, the greens, think one should be paying, as being subsidised by the difference. As my dad would put it: socialism is for people who can’t count.
blockquote>“ Those ‘subsidies’ are ‘tax breaks’.”
Right on, Ed Z
The “taxing authority” levies a per se …. 30% tax rate upon a business entity or a business entity’s product or service ……. but then the taxing authority, out of the kindness of their hearts, provides said business entity with a tremendous money saving “subsidy” by only forcing said business to pay a discounted per se 26% tax rate instead of the legally mandated 30% tax rate.
When tax rates are being cut, I’ve often heard leftists refer to the difference between the old tax rate and the new tax rate as a subsidy.
In a free market, removing subsidies for reliable oil and nat gas for power generation and the result would be coal use would climb dramatically. Reliability is a hidden cost factor that renewables (solar and wind) cannot and never will compete with. And the environmentalists will push back hard on any new hydro build outs.
The major fallacy is that a tax deduction for ordinary and necessary out of pocket cash expenses are a subsidy
Would those be the same subsidies that the government gives me when I get a personal tax allowance that allows me to keep a portion of my income from being taxed?
Yes. And you should be grateful for the privilege of keeping some of your own money!
The only way I believe to reduce carbon emissions is to promote all those technologies that can and will Carbon Capture. It’s either Utilization or Sequestration. Either CO2 from the atmosphere or directly from the combusted exhaust source. We have a Carbon Capture Utilization System that will capture the CO2 directly from the combusted exhaust.
Where it is ours or someone else, if we are going to do something about it it needs to be started soon.
This rot again?
There is one way, and only one way this scheme will be profitable, and it is this:
Get yourself a charismatic front man like Elon Musk to to hype it to the ends of the Earth. Apple Corp. selling to their base of True Believers is a similar model. Raise public excitement to the highest possible levels, and announce that you are going public, giving everybody the opportunity to get in on the ground floor.
You are now positioned to pull a great IPO Pump And Dump scheme.
Good Luck.
TonyL this Sidel system is new to me Please explain why it will not work?
@ Alan Tomalty
This video made a previous appearance in a comment thread here at WUWT, not to long ago. The commenters absolutely shredded it.
One thing that caught my eye is the top stream of the output product stream is CaCO3, calcium carbonate. The only source of the Ca is the organic matter from the farm. How long before the farm soil is depleted in Ca, and crop yield falls off a cliff? Perhaps the calcium carbonate can be converted to agricultural lime and returned to the fields to keep the process going? That is a sure money maker.
Speaking of soil depletion, they mention the below ground portion of the plants. Seems this deprives the field of even more of the organic matter needed to keep the soil healthy. So far, the farming practice sounds pretty bad.
Next up, ratios. How many tons of farm organic matter per ton of coal? Can such quantities be obtained, transported, and processed in a cost effective way?
The second product stream, biofuel production, is just as interesting. The chemical reaction process can be described as follows:
1) processed organic matter is introduced into the bottom of the reaction vessel. CO2 is introduced at the top.
2) Then A Miracle Occurs
3) Biofuels come out product stream 2.
We could go on, but I think this gives you a flavor of the situation.
Alan – The Sidel system will never be economic without political interference: They make the CO2-rich exhaust from a coal-fired plant pass through an amine spray, which absorbs “90%” of the CO2. They then use the resulting “‘bio fuel that after further refining on site will have a calorific value of twice that of most coals. This bio fuel with the addition of a burner on the boilers can be combusted alongside the coal, greatly reducing the amount of coal that has to be combusted“.
All of the calorific value of the “bio fuel” must come from the input amine solution and/or be introduced during the “refining”, because there is no calorific value in CO2 (you can’t gain energy by burning it a second time). If the process was economically viable, then you could get all the benefits from the original inputs without going through the convoluted CO2 process – but we know that such fuels are not generally competitive with coal. In other words, the energy that the process delivers, “reducing the amount of coal that has to be combusted“, will cost more (probably a lot more) than simply burning the equivalent amount of coal.
Sidel is designed for people who believe in perpetual motion.
https://www.climatecolab.org/contests/2017/energy-supply/c/proposal/1334029
Sorry, I missed an ‘end italics’. ……… “refining”, because there is no calorific value in CO2 (you can’t gain energy by burning it a second time). If the process was economically viable, then you could get all the benefits from the original inputs without going through the convoluted CO2 process – but we know that such fuels are not generally competitive with coal. In other words, the energy that the process delivers, “reducing the amount of coal that has to be combusted“, will ………
Alan,if CO2 comes from a low pressure combustion process and gets scrubbed by an amine, then the amine has to be regenerated, and this yields low pressure CO2. There’s no viable technology to revert the combustion process and separate the C from the O2. Nature does it via photosynthesis, but let’s say you do create an artificial process and you turn that CO2 into cookies, they get eaten, and eventually that organic material gets converted back to…CO2. In other words, taking CO2 through a side trip doesn’t remove it from the books.
The only way we can make this work is to compress and cool the CO2, turn it into a liquid, and put it in a pipeline that goes into very deep water. As it turns out liquid CO2 is denser than water, so it’s probably going to sink slowly into seabed sediments until it reaches a warmer environment and then it’ll slowly try to bubble back to the sea floor. This is a very complex heat transfer problem, and it requires that sea floor sediments have just the right properties, but I think it may be feasible to store CO2 for several hundred years without raising ocean pH. Is it a crazy scheme? Somewhat. But it’s not as crazy as the other ideas we see floating around.
What’s crazy is the notion of spending even a penny to capture or sequester CO2.
Nature already provided a Carbon Capture Utilization System. Fossil fuels and the Oil and Gas industry. We should make it as clean as practical and learn to enjoy it.
Forget all you heard about CCS it will truly only increase the cost of energy production and end costs for consumers hitting the poorest the hardest. The only real, reasonably viable and affordable, CO2 free from actual energy production methods that can be places almost anywhere are either Hydro or Nuclear
Unfortunately belief is nor useful part of a machines operation. So what you believe will have zero impact.
What counts is the cost of building a machine and the benefit derived from it
The cost benefit ratio of carbon capture and indeed renewables is way way higher than e.g. nuclear power, so neither are worth implementing.
Instead, build nuclear power.
Or stop worrying and learn to love CO2.Plants do.
The only viable for of carbon sequestration:
Plant a tree.
No, more CO2 in the air is like manna from heaven. It’s a resource that was in very limited supply, which is now much more abundant and is a boon to every living ecosystem on the planet. Forests and oceans will of course, begin to sequester the CO2, as they always have done. Luckily, deciduous forests will leave us with an annual infusion each fall as the leaves and plants die off and decompose. The added benefits of much of that CO2 will stay with us for some years. This blessing will last until the foraminifera and other shell builders in the oceans sequester the CO2 with calcium and it sinks to the bottom of the ocean, where it cannot easily be returned to the air (until plate tectonics ginds it up and spits it back into the air in a volcanic eruption). If we could get the concentration of CO2 in the air up to 600 ppm before we run out of cheap fossil fuels, that would be great. 1000 ppm would be even better, but I’m not sure we have enough easy access coal and oil and natural gas to get us there.
It’s good that people realize that discouraging people from using petroleum means they will use the next most practical energy source.
No politician is ready for the kickback that will result from cutting off all practical energy. Renewables aren’t there yet, and may never be. If it weren’t for fracking, most of the coal powered generators that were closed down, wouldn’t have been closed down.
Cut ALL energy subsidies and let free markets do their job. No subsidies, no carbon taxes, just good old economics.
What subsidies are there in oil and gas production?
None its a twisting of the offset of oilfield development against future profits for tax purposes by the greens to make out oil and gas are ‘subsidised’.
The tax breaks are not a subsidy, any more than a company not having to pay taxes on the cost of procuring the wholesale item to sell.
Well, you sold $1,000,000,000 in merchandise, so you owe us 21% or $210,000,000!
For the oil and gas companies, the only tax breaks they get are the same tax breaks every other company gets, they are not taxed on the portion of their sales that goes into procuring what they sell.
So, if they dig a well for $1,000,000 say, and it produces $2,000,000 in salable oil, they are not charged taxes on $2,000,000 but only one the $1,000,000 in profit they realized.
I really really get tired of this fallacy that this is a tax break. And I can tell you who pays the taxes on companies. The employees of the company, as evidenced by the pay raises after corporate tax reform!
Put it this way; a subsidy puts money in your pocket you never had. The government declining for one reason or another to pilfer some portion of the money you made is not a subsidy.
I beg to differ.
Paying employees more reduces the tax a corporation has to pay. Employees do not benefit at all.
Shareholders may benefit, because that means more money is available to give in dividends.
Now, here in Oz, we have ‘franked dividends’ which means shareholders get a discount of the amount of tax already paid by the corporation. That means a corporate tax of 30% gives a franked dividend that a shareholder with a 40% marginal tax rate need only pay 10%.
So who do corporate tax cuts benefit? Well, those with a lower marginal tax rate than the previous corporate tax rate (maybe pensioners) and foreign investors for whom tge tax already paid is not deductible against their own tax. The only politician in Oz who appears to understand this is Keating.
I have no idea if it’s the same in the US, though, but I can’t see how employees can benefit, at least directly.
Cutting corporate tax can also make capital investment of corporations more likely, since the tax deduction for these are over tine, and the immediate hit is therefore going to reduce.
That’s my take on corporate tax, at least in Oz, but I’m happy to be corrected as I’m no economist.
Paying workers more doesn’t benefit them?
“…Paying employees more reduces the tax a corporation has to pay. Employees do not benefit at all…”
Dafuq?
Employees do not benefit because of reducing corporate taxes. It makes no difference to them.
There is no reason that reduced corporate taxes would encourage corporations to pay employees more that I can see.
@jer0me;
Many very large (and not so large) companies offer matches to employees contributions to savings, IRA, and 401K plans. These matches are often in the form of company stock. Anything that boosts the value of the stock in such circumstances directly benefits the employee.
How interesting. Not often you see FF subsidies discussed among those who tend to complain about subsidies to renewables.
This seems to be a key finding: “In the future, when we talk about subsidy removal, we really need to focus our efforts on oil and gas exporting regions.”
So, they modeled this. Seems like it would be a pretty tough thing to model, subject to unpredictability and complexity of the market, the possibility of new technology in both FF and renewables, infrastructure change, tariffs(!)… How do we know it’s accurate? How is the model tested?
Why is this more believable than climate models?
“Cut ALL energy subsidies and let free markets do their job. No subsidies, no carbon taxes, just good old economics.”
It seems to me this is advocating for society to be ruled by money and the pursuit of it. There is no ethic here. Free market capitalism inherently leads to wealth accumulating in the hands of a few. Money means power. Unconstrained free markets lead to oligarchies. But capitalism is a better option than any other system. That’s one reason we need both conservatives and liberals – the tension between the two (ideally) prevents either one from gaining too much power and steering us into ruin. But we need to be able to talk and compromise, and that means ending mutual vilification.
“Not often you see FF subsidies discussed among those who tend to complain about subsidies to renewables. ”
Mostly imagined vs real.
Coal -$130m $0.86/MWh
Gas – $15m $0.30/MWh
Solar – $2002M $412.11/MWh
Wind – $388m $41.84/MWh
http://www.minerals.org.au/file_upload/files/media_releases/Electricity_production_subsidies_in_Australia_FINAL.pdf
Taken from Federal and State government Budget papers.
Are you Griff?
Lee, if they are not Griff, must be a genetic clone…
“It seems to me this is advocating for society to be ruled by money and the pursuit of it. There is no ethic here. ”
Oh. you need to read Chrematistics on wikipedia. Unless you are Aristotle reincarnate, of course.
“Free market capitalism inherently leads to wealth accumulating in the hands of a few. ”
If you mean that rich people are getting more wealth, this is true. Politics is as good at it, too, and even better, seems to me.
If you mean that poor people are getting poorer, because their little wealth is siphoned out into rich people pocket, this is not true. Only politics can do that.
“Money means power. ” NO. To use money, you have to let it go to other hands. When you use power, you don’t let it go, you even strengthen it. That’s very different
Money only means power to the extent that you can use it to buy politicians.
If the politicians don’t have the power to control the market, then buying them is a fruitless endeavor.
We don’t discuss these subsidies because they don’t exist.
It is socialism that results in money concentrating in the hands of the few.
Under free market capitalism wealth flows to whoever is best at creating products that people want and need.
It really amazes me how socialists use government to create problems, and then declare that they have proven that the free market doesn’t work therefore we need more socialism.
Most of the so-called “hundreds of billions of dollars each year in tax breaks or other subsidies” assigned to oil companies are calculated as a consequence of their not paying for “the social cost of carbon” they produce. As I recall, Hans Schellnhuber was the source of this nonsense.
If you look at the absolute subsidies for fossil fuels, they’re extremely small; as I recall from an assessment I did once, smaller than the subsidies given to solar and wind by factors of 10 or more. And if you normalize the subsidies by electricity produced the disparity grows larger.
Most of the so-called fossil fuel subsidies are actually tax write-offs for standard depreciation of capital equipment.
I may be able to find that assessment. If so, I’ll post it here.
What subsidies to oil and gas.
Their net tax rate is less than 100%.
Leftists are incredibly stupid and clueless. If Leftists were allowed free reign, the entire world would end up looking like Venezuela.. Imagine that.
Leftists punishing fossil fuel companies for supplying the motive force that drives the global economy would obviously have devasting economic consequences.
Using the tax code as applied to ALL corporations is NOT “subsidizing” the oil industry, it’s merely allowing ALL corporations to keep more of the profits they EARNED. Moreover, corporations don’t actually “pay” taxes— consumers and employees pay for them in the form of higher prices and lower wages…
There are some unique tax codes specific to fossil fuel industry, which should, perhaps be reviewed, however, these fossil fuel tax codes do enable higher supplies of fossil fuels, leading to lower fuel prices, which is a good thing for everyone.
A huge portion of global “oil subsidies” involve governments reimbursing fossil fuel companies who are forced to sell fossil fuels below production costs to enable consumers to buy fuel at arbitrary fixed government prices, which is insane.
Just let price discovery work and let the market determine prices.
Here is the US Energy Information Agency website, outlining subsidies given to the various energy sectors: http://www.eia.gov/analysis/requests/subsidy/
Table ES2. Quantified energy-specific subsidies and support by type, FY 2010 and FY 2013 (million 2013 dollars)
Here’s FY 2013:
Coal, 2013: $1.085 billion
Natural Gas and Petroleum Liquids, 2013: $2.346 billion
Solar, 2013: $5.328 billion
Wind, 2013: $5.936 billion
Renewables, 2013 total: $15.043 billion
Table ES4. Fiscal year 2013 electricity production subsidies and support (million 2013 dollars, unless otherwise specified)
Coal: 6% of subsidies
Natural gas and petroleum Liquids: 4% of subsidies
Renewables: 72% of subsidies.
In the US, renewables get 7x the absolute subsidies of fossil fuels (Table ES4) and produce about 5x less power (Table ES5). That’s, what, 35x the subsidies per unit of energy produced.
So I call BS on the entire argument.
Strikes me the real message is underneath this rubbish.
Subsidies for Oil and Gas.Name one.
No.
The planet destroying rot is subsidized by us dumb taxpayers alright.
Subsidizing a a parasitic overclass is what destroys civilization.
I say we stop subsidizing the nonproductive,the fools,the bandits all who feast at our expense will they seek to destroy the means by which we provide for them.
Currently the ticks are trying to dictate to the cattle,what fodder the cattle must eat .
Ain’t Kleptocracy grand.
..while they seek to destroy..
Dick Durbin Dem. ILL. believes any tax less than 100% of gross revenue is a subsidy. The subsidy he wanted to call off budget expenditures.
Thanks to all you commenters. I have often carped about the fact that subsidies for fossil fuels do not exist (except in places like Venzuela, Saudi Arabia for folks who live there). As a result, I was totally caught off guard by the way the article discussed getting rid of them – as though they existed! I began to doubt myself. But nobody (that I could detect) on this site was fooled, and I breathe a sigh of relief.
In the past, some states used to pay subsidies to tobacco farmers. That stopped years ago. Subsidies for fossil fuel never existed in the US. Depletion allowance is one thing they are allowed, but that applies to any endeavor where the resource can run out, like mining. Wind and solar do depend on mining in a big way.
Question if ‘evil oil companies ‘ were to disappear tomorrow that mean more or less money available to the government , and therefore available to the general population, due to the loss of tax income as compared to no longer paying subsidies to the same ?
Well right now the answer is ‘less ‘ a lot less
Change this question so you consider the renewable industry, and it is an industry out to make cash, and the answer becomes more.
Therefore if the goal is to increase the amount of money a government has, which can then be used for areas such as health or education, you known what to do .
Yet oddly , they are not making this call at all !
Has it occurred to anyone else that the combination of ‘subsidies’ and ‘carbon taxes’ would effectively amount to a basis for a colossal money-laundering scheme?
Al Gore is waaaaaaay ahead of you there.
Short answer: Oh, hell yeah, it has.
These energy-ignorant morons can’t see the 800 pound zero carbon Gorilla sitting in the room – the
commercialization of small modular molten salt nuclear reactors, which not only can provide baseload but peak load power as well and will produce power cheaper than any other technology,
including coal. These jerks act as if primitive wind and solar power will still be not only around come 2040, but will be the only game in town. Idiots making idiotic predictions, based on ignorance.
Fossil fuels receive mostly tax breaks, renewables receive subsidies. The media erroneously lumps the two together under under “subsidies”. By definition a subsidy is “money given by a government….”. With a tax break, you’re receiving nothing, rather you keep more of what was yours to begin with. The implication is obvious, as it allows the media to say “see, fossil fuels also receive subsidies”.
Not only that, some of those in the media doing that are themselves the beneficiaries of direct government subsidies or taxation in the form of a licence fee. Step forward the BBC, and claim your hypocrisy prize.
Exactly: ‘renewables’ are subsidized.
Fossil fuels have cost of business write-offs, that get CALLED subsidies by those who degrade the industry.
Not ‘erroneously’ – that implies ‘error’. This is on-purpose.
What is the in-play definition of “subsidy” here? Actual money paid to a commercial company to encourage it to engage in an activity. Or offsetting expenses against income to calculate taxable profit just like any other company? ie. not a f*****g subsidy at all…..