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Sep 18, 2009 04:41 PM | 31
At least some members of the Obama administration plan to call for an end to fossil-fuel subsidies as part of next week's G20 economic leaders summit, citing positive impacts ranging from improved energy security to combating climate change. But how much does the U.S. government pay? Well, according to a new analysis from the Environmental Law Institute released today, roughly $72 billion between 2002 and 2008.
More than $54 billion of that was in the form of 23 different tax credits for oil, coal and natural gas producers, including those overseas, most of which are permanent provisions of the U.S. Tax Code. Just $18.3 billion was grants and other direct cash for research and development and other pursuits, such as the Strategic Petroleum Reserve.
Renewables such as wind, solar and hydropower received nearly $29 billion in all, much of it also in the form of tax credits although, in this case, credits that expire after set durations. And more than half of the renewable subsidy—$16.8 billion—went to the production of ethanol from corn, a controversial biofuel that can cut into food supplies and has significant environmental consequences, including greenhouse gas emissions and expanded dead zones from fertilizer runoff.
"The vast majority of federal subsidies for fossil fuels and renewable energy supported energy sources that emit high levels of greenhouse gases when used as fuel," the report's authors write. "These figures raise the pressing question of whether scarce government funds might be better allocated to move the United States toward a low-carbon economy."
Of course, not all fossil fuel subsidies are bad in that regard: research into carbon capture and storage, which garnered $2.3 billion, may be the key to preventing catastrophic climate change while we continue to burn coal. And there's a missing link, as well: nuclear energy, because electricity derived from fission is neither a fossil fuel nor renewable. But it is, once operating, a power source without carbon dioxide emissions.
Image: © iStockphoto.com / Andrew Penner
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31 Comments
Add CommentThere *is* a recent case of a fossil-derived fuel looking subsidized.
Reply | Report Abuse | Link to thisHow does a fuel *look* subsidized? By looking exclusive. When you take advantage of a subsidy, you are taking money from the government. They don't let just anyone do that. Jamie Lee Curtis can get ultra-compressed hydrogen for her FCX Clarity at a price that's reputed to be $5/kg.
If someone from Joe's Welding Shop came to the same hydrogen pump with a bunch of hydrogen cylinders in the back, hoping to get in on that deal, they couldn't; they have to pay the usual $100 or so per kg.
All the fossil fuel products that anyone can buy any amount of, as long as they have the ready cash and the containers to put the products in, are unsubsidized.
In fact, they typically are specially taxed, so that the buyers subsidize government, not vice versa.
Never stops making me puke when I see the end result of corrupt government in action! 72 billion for an industry that makes criminal profits from other citizens misery. Let's see, 2002 through 2008; who ran the government during that period? Was it the same folks who had secret meetings with their Oil friends at the beginning of their Administration ? Hopefully the current Administration will find a way to end this bit of theft from the public coffers!
Reply | Report Abuse | Link to this@GRLCowan
Reply | Report Abuse | Link to thishydrogen for the FCX Clarity is subsidized, but not by the governemt - it's subsidized by a combination of Honda and the Clarity Lessees. See, Jamie Lee Curtis doesn't own an FCX Clarity. Honda does. Jamie pays (dearly) for the right to drive one. FCX leases are only offered during a small window of time and only in a small geographic area, mostly because the FCX Clarity is essentially Honda's early test to see what sort of hydrogen infrastructure will be required if/when a hydrogen powered vehicle would be introduced to the public at large.
Subsidized hydrogen just for clarity owners? Sure. Though of course chances are Jamie and other clarity owners are actually using the 'Home Power Plant' to generate hydrogen at their own expense using a natural gas based device. In reality though I think you could argue that Jamie and other Clarity lessees are the ones subsidizing their own hydrogen: they are paying $21k to lease a car for 3 years with no option to continue or purchase the car afterwards. Really, I'd say that's $10k towards a socialist concept of communal hydrogen subsidy and $11k to Honda to help them offset the cost of real-world trials of an otherwise experimental car.
Now back to petroleum subsidies... do you really mean to argue that nationally sponsored petroleum subsidies don't count since everyone has the ability to buy (subsidized) petroleum products? Do you work for ExxonMobile's marketting department? (If not, maybe you should).
Just think were we'd be if that kind of support went towards the developement of space based solar power satellites, or alternative fusion research, or even next generation nuclear fission power plants to carry us through until future fuel sources are developed. Perhaps we could have avoided a few trillion dollars spent on wars to secure our tenuous relationship with or strategic fuel sources.
Reply | Report Abuse | Link to thisI'm not opposed to subsidies for wind, earth based solar, geothermal, tidal and similar, but don't have much hope that they can fuel the industrial economy, but they'd be great if they merely helped us get through to the next level.
If the government would quit paying all those subsidies to oil, coal, and natural gas, we could pay for our health care. Why does these billion dollar profit companies need subsidies anyway? The Bush administration really got this country messed up. Let's hope that President Obama can undo all the damage the Bush administration caused. Thank God McCane didn't get in office.
Reply | Report Abuse | Link to thisI cant agree that nuclear power is without a carbon foot print (once the massively carbon polluting plant has been built), we must consider the large amounts of carbon produced in the mining, concentration and purification of the very low concetrations of uranium in most ore. The minor problem of dealing with the RADIOACTIVE waste is yet to be addressed, not to mention the yet unfunded ( read taxpayer funded) decommisioning of such plants. Pray the nuclear plant does not melt down, leak or have wastes "diverted" NO one will give you insurance (check your policy) . There is an abundance of alternative power sources ready to go now and with basically no funding or research input. Lets just do it, what is the great problem? If big oil or big coal could guarantee their profit margins we would have gone green years ago.
Reply | Report Abuse | Link to thisIt will take ten years at best to build a nuclear plant, you have max. thirty years of uranium and no where to bury the waste. Fusion is thirty years off and always will be. The sun always shines somewhere, the wind always blows and currents flow. Hot rocks are always hot. Store excess energy as hydrogen, water potential energy or even "cavern" compressed air for baseload/night use. Link the lot to a national DC grid and hey presto, sustainable, green, long term power. PS What is it with Americans and health care? It seems half the population lives without any health insurance and the other half worry themselves sick about getting and keeping health care. Down here in OZ we have a simple process, pay a couple of percent extra tax and problem solved. Its not perfect but its a no worrry, no brainer solution. Sounds like your going to have a revolution over there.
Reply | Report Abuse | Link to thisHow can a scientific journal even mention carbon capture and storage as a solution. The process is totally unproven, and no commercial scale plant is close to operational. If we see a single plant in ten years it will be a miracle and by then it will be too late to prevent catostrophic climate change or even worse, ocean acidification (the unnoticed gorilla in the room) - Algae- photosynthesis- oxygen. We have the solutions but not the political and commercial will.
Reply | Report Abuse | Link to thisI don't mind paying for renewables, esp if the technology is made and developed locally. I would like to get away from fossil fuels, they seem rather outdated and dirty. I do have to agree with zero about carbon capture and storage.
Reply | Report Abuse | Link to thisWoopsSorry Cosmic, forgot to mention that carbon capture and storage burns more coal to run the process and thus produces about 25% more carbon dioxide. Hey its a system made in heaven. I do hope the storage area is geologically stable and its guaranteed that the gas cant ever leak out (otherwise we would be in big trouble). Dont worry, these things can never happen.( Thanks Ivan from Chernoble). I think they need to talk to the nuclear storage people, they can lock up wastes for half a million years! Just think about that. Woops, pushed the wrong button and shot off to another site. Hey lucky I wasnt running a nuclear power plant and drinking. I,m glad I didnt lose this comment, there never as good when you rewrite them.
Reply | Report Abuse | Link to thisThe right to commute and be preocuuppied should not be confused with the responsibility to be alert when driving. A couple of drives to and from work already amounts to the energy needed to heat a home for one winter bordering Canada. If I burn softwood is it subsidized? If I burn it completely in a high temperature ceramic stove do I release more CO2 than if I let it rot?
Reply | Report Abuse | Link to thisIf there are 6.5e9 of us, why some of us consider it a right to use more than we replenish on the surface of the earth? It's a war against organized stupidity, that has nothing to do with left or right, republican or democrat and most of us know that very well but ignore the writing on the wall.
"Do you really mean to argue that nationally sponsored petroleum subsidies don't count since everyone has the ability to buy (subsidized) petroleum products? "
Reply | Report Abuse | Link to thisNot exactly. I meant IF they were subsidized, not everyone could get them, just as not all of the homeless can get subsidized housing.
From the fact that anyone with the ready can get them, it follows that they are not subsidized. The subsidies Biello mentions add up to much less than the special tax revenues, so the net is that petroleum product users subsidize government.
Every civil servant therefore has an interest in protecting fossil fuels' market share. It would be a lot easier to accomplish conservation and substitution if this were not so. If fossil fuels WERE subsidized, every civil servant would be looking for ways to help you get off them, so that he can divert their subsidy to himself or herself.
About JLC's hydrogen being paid for, but not by government -- that's probably a good point. Although there was the Bush hydrogen-car "initiative".
From all the comments it seems most people believe subsidies make products cheaper - not true.
Reply | Report Abuse | Link to thisAny one who has done a marketing course knows that you charge for a product what the market will pay for the it, irrespective of how much it costs you to make it, provided you are making a profit.
If I was to come up with a simple 1cent per kg compound that cured cancer, I could demand and get $10,000 per home made 1.5 gram tablet. When demand exceeds my ability to produce then I get a massive subsidy to put up a plant. I still sell the tablets at any price I chose, unless I was stupid to allow the government to insert clauses concerning pricing.
A market economy should have no subsidies.
"ethanol from corn, a controversial biofuel that can cut into food supplies" BS! ethanol is made from corn UNSUITABLE FOR HUMAN CONSUMPTION! It's made from FIELD corn used to FEED COWS not people. Furthermore, the distiller grains that exit the biofuel cycle are then used to FEED COWS. The lie that ethanol raises human corn prices and starves people was created by the OIL industry and repeated by IDIOTS.
Reply | Report Abuse | Link to thishey lets not get into agriculture and subsidies. Lets get rid of all farm subsidies and have real free trade, not pretend free trade. OZ farmers dont know a lot about energy subsidies but they sure know a lot about European and US agricultural subsidies.
Reply | Report Abuse | Link to thisThe term subsidy seems to be used a little loosely here. Tax credits in the oil industry simply reduce the amount of taxes paid (for whatever reason), this energy source still makes our lives better and allows creation of wealth in our society. The government needs to pay people to use ethanol in the US, it doesn't bring in any positive tax revenue.
Reply | Report Abuse | Link to thisThe term subsidy seems to be used a little loosely here. Tax credits in the oil industry certainly reduce the tax revenue paid to the government. But that revenue is still positive. Ethanol in the US needs to be supported to make it viable, there is no positive tax flow to the government. Fossil fuel energy has made a tremendously positive impact on all our lives (try living without your car and electricity), renewables have a long way to go before they can replace fossils.
Reply | Report Abuse | Link to thisDear mikepbel. I think some people realise that fossil fuels have given us a good life, but I believe that most people dont give it a second thought or take it for granted. We also have to consider that the we and us in all this refers to the one billion of we/us in the first world. The 'great unwashed' billions of the "developing" will never benefit significantly and in fact will suffer from the consequences of its use. As for renewables not replacing fossil (A) we may not have a choice soon (B) there will never be enough fossil for all and (C) we will never replace fossil with renewable unless we build some.
Reply | Report Abuse | Link to thisLetting a company keep more of their money is not a subsidy. But, this is predictably typical from your standard liberal ideologue who thinks profits are evil and all money belongs to the state.
Reply | Report Abuse | Link to thisThe supposed $70 some billion in "subsidies" for fossil fuels pales in comparison to the amount of taxes this industry pays to the government. Take Exxon Mobil as one example. They paid over $100 billion in taxes in just one year. So, these tax credits merely reduce the tax liability. Every company in every industry can take advantage of tax credits.
Reply | Report Abuse | Link to thisIf you want to look at a real subsidy, look at ethanol or solar energy. These industries pay very little tax because they don't make much in profits. Here subsidies are paid directly (% of installation cost, set power purchase prices, dollars per gallon subsidy).
In other words, the fossil fuel industry carries its own weight. Even if these so-called subsidies were eliminated, it would have very little effect on prices since the credits are minimal compared with volume. Ethanol and solar do not carry their own weight. Subsidies are a means to make an otherwise foolish economic venture whole.
"It will take ten years at best to build a nuclear plant, you have max. thirty years of uranium and no where to bury the waste."
Reply | Report Abuse | Link to thisNine of those years are the result of environmental whackjob lawsuits and regulations.
Uranium supplies are limited to 30 years instead of 30 million by whackjob lawsuits and regulations preventing breeder reactors.
Nowhere to bury the waste are the result of environmental whackjob lawsuits and regulations preventing the transport of mid-level waste to oceanic trenches where it can be safely dumped and subducted into the crust.
Summary: The issues with nuclear power are caused by liberal activism, not technological limitations. But, that's no surprise. Every drag on human progress today is the result of liberal activism.
You may be right about the oil industry carrying its own weight, or not. I don't know.
Reply | Report Abuse | Link to thisI can say it's carrying all of us. Right into the ground.
Sorry PsySciGuy, but the large farming conglomerates choose to grow animal feed quality corn instead of human food quality. Why? Well, just like the oil companies, there in business to make money. And when you can get rich growing a product heavily subsidized by the government, why waste your time growing something people eat.
Reply | Report Abuse | Link to thisIt's very interesting the double standard applied to the oil industry. Many industries get government subsidies, but only the oil companies are bad guys?
Wow - I didn't even notice that the advertised subsidy number of $72 billion was a 7 year total. This is about $10 billion per year. If oil is selling for $70 per barrel, and the U.S. consumes 19.5 million bbl/day, the U.S. spends about $500 billion on oil annually. So, if the entire $10 billion in "subsidies" were for oil alone, it would subsidize oil to the the tune of about 2%. Since the $10 billion is also for gas and coal, let's say that oil is subsidized by about 1%. Even if we call this a subsidy, which it is not, it is insignificant and oil demand would be totally unaffected if the tax credits were revoked.
Reply | Report Abuse | Link to thisI don't know the exact subsidy for ethanol, but I believe it is on the order of $1.00 per gallon paid directly to the producers. Now that is a subsidy with the power to drive demand and distort markets. And, solar subsidies are large as well.
By the way, does anyone else see a problem with classifying spending on the SPR as a subsidy to the fossil fuel industry? The author's take on this indicates the political intent of the study.
Hey Psysciguy. Field corn is the same corn used for things like corn flour, corn meal etc. And the same fields that are used for corn for ethanol could be used for other grains. Increased demand for corn for ethanol does increase food prices at least in the short term until more production of corn can come to market. The degree can be argued, but the effect cannot be argued.
Reply | Report Abuse | Link to thisfrgough,
Reply | Report Abuse | Link to thisI see you copied your talking points from Hannity, Limbaugh and company well. It's such a shame that industry is not allowed to dump their toxic, untreated waste into the enviroment as they were allowed to in the past. Just think how much money they could make! Stupid liberal activists.
So they subsidised CCS research to the tune of $2.3billion? No they didn't, they gave money to big polluters to pay for bogus green advertising campaigns. Take a look at biomass pyrolysis research which is the only technically feasable and economical way of removing CO2 from the air. The research was all paid for by donations from friendly admirers! The polluters haven't even started to tackle the problem to any realistic degree....
Reply | Report Abuse | Link to this
Reply | Report Abuse | Link to thisI don't see how they can not count all the other subsidies like the military in the Persian Gulf , Oil wars, imported oil costs/balance of payments costs that are indirect and in our income taxes.
These drain our economy by $1T?yr, a very large subsidy. And this is from the WSJ, Economist Mag, Oil and Gas Journal, etc.
Nor does it take into account pollution or CO2 costs. If these costs were in oil as it should be we could give tax cuts, help switching to more eff vehicles and balance the budget. The great thing is the cost would by keep the cost of oil down, be mostly paid for by Iran, Russia, oil dictators.
PsySciGuy,
Reply | Report Abuse | Link to thisethanol from corn is not a great source of energy because it takes so much energy to grow the corn, make the fertiliser, water the fields, harvest it, etc.
Sugar-cane is 6 times the energy return from corn. Corn is lucky to break even, on an energy basis.
Also, if you're growing corn that is "UNSUITABLE FOR HUMAN CONSUMPTION!" as you put it, then rather obviously you are NOT growing corn that IS fit for human consumption. I appreciate your point about the ethanol waste cake then going on to feed cows which can be a source of food, but I think some of your points are too simplistic and glib to go around calling everyone else an idiot.
On nuclear power. If we HAVE to go nuclear (IF there are too many problems with renewables*), then Gen3 and Gen4 nuclear power plants can 'burn' the nuclear waste we'll otherwise have to store for 100 thousand years. Apparently there is enough nuclear 'waste' to run Gen3 and Gen4 reactors for the entire world's power for the next 500 years or so, and that's just today's waste! Then the waste from fast-breeding is so 'hot' that it burns itself out, and so only needs to be stored for 500 years or so and it is back to safe levels.
* On renewables: I wish we could quickly fund just ONE modern city or even State to run entirely on a renewable grid just to see if we can do it! I'd love to see this as a goal. Can renewables provide true baseload power? I used to think that a mix of technologies could do so, but at what cost? Sure we can have solar thermal with salt storage, but what about a week of rain? (Would we back it with biogas?) How much would this cost? Then there's CETO wave power, OTEC ocean power, geothermal, etc. I hope we can do it, but my guess is it will take different mixes of renewables for different continents and regions.
Obama needs to make up his mind if he really IS for change, or if he's just into making policies that keep the status quo and don't unduly ruffle anyone's feathers. We need someone brave enough to eliminate the oil subsidies, stop our reliance on oil (not just foreign oil but all oil), and mandate that all American car companies produce ONLY electric cars within five years. Obama compared himself to Abe Lincoln during his campaign. If Abe had been so unwilling to shake it up, we'd still have slavery in this country today - but all the slaves would get free health care.
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