China, US Could Eliminate $20 Billion In Fossil Fuel Subsidies

Almost 3 years ago, the United States and China announced that each would undertake a peer reviewed analysis of the subsidies each provides to the fossil fuel industry that are no longer relevant and could be eliminated. At the G20 conference earlier this month, the results of those studies were announced. The total? A whopping $20 billion dollars annually.

fossil fuel subsidies include fracking

The US report identified 16 “inefficient” fossil fuel subsidies for exploration, development, and extraction of fossil fuels that could be phased out or reformed. The Chinese report found 9 similar subsidies, including some that benefit specific groups of users such as fishermen and taxi drivers. In total, the subsidies amount to $8.1 billion in the US and 14.5 billion in China.

Fossil fuel interests are always tearing their hair out because they complain renewable energy sources such as solar, wind, and geothermal receive subsidies. They beat their chests as they loudly proclaim that renewables are not competitive with fossil fuels because the cost too much.

Let’s examine those claims, shall we? Fossil fuels like oil have to get from where they come out of the ground to where they are refined. Then they have to be distributed to the places that sell them. Transportation makes use of roadways, bridges, rail systems, and waterways that are largely maintained by the taxpayers. You don’t hear ExxonMobil and BP demanding to pay more money to help support the infrastructure that makes their business model possible, do you? Not in this lifetime, brother. Whenever you hear someone complaining about a level playing field, it only means they are upset it is not tilted far enough in their favor.

The fossil fuel industry also conveniently excludes from its calculations the damage its extraction methods do to the environment. Would you buy a house in an area where fracking has polluted the ground water? Would you move to a location where coal companies are removing whole tops of mountains and throwing them away like yesterday’s fish, filling in the valleys below?

We haven’t even touched on the economic impact of carbon and methane emissions. Is it even possible to calculate the damage being done to the earth’s environment by burning fossil fuels? If the price of gasoline was equivalent to its true cost to society, it would cost $10 a gallon or more. But it doesn’t. The difference between its true cost and what is sells for down at the local Gas-n-Go is a subsidy, friends. Do you hear any fossil fuel executives complaining about that? No, you definitely do not.

And let’s not get all weepy-eyed about how ending fossil fuel subsidies would damage the US economy and throw millions out of work. A recent study by the Council on Foreign Relations finds that eliminating the first $4 billion in US subsidies would bump up the cost of a gallon of gasoline by 2 cents. The cost of domestic electricity might rise $7 a month. Is that too much to ask to keep billions of tons of pollutants out of the atmosphere?

The whole subsidy debate misses the point. If it is confined to just how much money the federal government puts directly into the pockets of fossil fuel interests, that automatically diverts our attention away from the other costs — which economists call “untaxed externalities — such as damage to the environment and health care costs associated with breathing polluted air and drinking contaminated water.

Oh, and one more thing. The US government funds 100% of the cost of the Strategic Petroleum Reserve, which is sort of an insurance policy for the fossil fuel industry in case of an interruption in supply. Mankind will have taken a giant step toward sustainability when the day arrives when the Reserve is no longer needed.

Source: Green Car Reports

 

Steve Hanley

Closely following the transition from internal combustion to electricity. Whether it's cars, trucks, ships, or airplanes, sustainability is the key. Please follow me on Google + and Twitter.