We're republishing this original article from November 2020 in light of a new IMF report that highlights the massive subsidies the fossil fuel industry receives every year (to the tune of 11 million dollars every minute).Read below as we shed light on what these subsidies are and why we need reform.
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By now, it’s abundantly clear that we need to transition to a clean energy system at “wartime mobilization” speed. But a few key things are preventing us from getting there faster, and here’s one of the worst offenders: continued massive subsidies for fossil fuels. U.S. taxpayers spend tens of billions of dollars a year subsidizing new fossil fuel exploration, production, and consumption, which directly affects how much oil, natural gas, and coal gets produced—and how much clean energy doesn’t.
Despite what the coal, oil, and gas industries (and their entourage of politicians) would have us think, most of us would be shocked at how much we prop up fossil fuels versus renewables. The playing field isn’t even close to level. Here’s a breakdown of some numbers of which every American citizen should be aware.
First, let’s consider just the direct subsidies for fossil fuel production—money that flows directly from the government to fossil fuel companies to support activities like exploration, extraction, and development. A conservative estimate from Oil Change International puts the U.S. total at around $20.5 billion annually, including $14.7 billion in federal subsidies and $5.8 billion in state-level incentives. A whopping 80 percent of this goes to oil and gas (with the rest supporting coal), and most of the subsidies are in the form of tax deductions and exemptions and other “obscure tax loopholes and accounting tricks” that result in massive avoided costs for fossil fuel producers.
By comparison, direct U.S. subsidies to renewables are much smaller, and renewable energy developers aren’t even able to access many of the same breaks that fossil fuel industries do. Moreover, most of the tax breaks that renewables get—like the investment and production tax credits for wind and solar—are only temporary (so far), with expiration dates looming. Looking at the permanent tax expenditures alone, these favor the fossil fuel industry over the renewable energy sector 7 to 1, with permanent tax spending for renewables totaling only around $1.1 billion in 2016.
But this is only a small part of the picture.
Keep reading here.
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