Fossil fuels keep getting the breaks
Photo: Wikipedia commonsRemember last September when a powerfest of world leaders at the G-20 summit in Pittsburgh vowed to start phasing out government subsidies for fossil fuels? Truth is, they might as well have been vowing to end world hunger and bad manners, because that is one big honkin’ rock to push up the hill. The latest indication of how big is a new report from Bloomberg New Energy Finance, which confirms that governments around the world shell out significantly more money in subsidies for fossil fuels than for renewables:
“One of the reasons the clean energy sector is starved of funding is because mainstream investors worry that renewable energy only works with direct government support,” said Michael Liebreich, chief executive of New Energy Finance. “This analysis shows that the global direct subsidy for fossil fuels is around ten times the subsidy for renewables.”
Oiled again: The disparity isn’t quite so ridiculous in the U.S., but it’s still significant. Research by the Environmental Law Institute [PDF] showed that from 2002 to 2008, the U.S. government provided about $72 billion in fossil fuel subsidies compared to $29 billion for renewables. (Note that a big chunk of those renewable subsidies went toward the increasingly dubious investment in ethanol.) The Energy Collective points out another disadvantage for renewables:
Most of the largest subsidies to fossil fuels were written into the U.S. Tax Code as permanent provisions. By comparison, many subsidies for renewables are time-limited initiatives implemented through energy bills, with expiration dates that limit their usefulness to the renewables industry.
Grist’s David Roberts cut to the chase when he weighed in on the Environmental Law Institute study:
Conservatives, of course, don’t want to acknowledge that tax breaks are subsidies. They want to call them “incentives” and accuse anyone who proposes repealing them of “raising taxes.” It happened during the debates over the 2007 energy bill — a version that would have rolled back some oil industry tax breaks was filibustered to death by Republicans under the guise of fighting “new taxes.”
Money can buy you love: To his credit, President Obama, in his 2011 budget, asked Congress to axe $35 billion in oil and gas tax incentives over the next 10 years. Fat chance. A proposal by Sen. Bernie Sanders (I-Vt.) to do just that and use the money to pay down the federal deficit and promote energy efficiency was roundly defeated, 61-35, in the Senate earlier this summer. Of course, there’s still a chance the Senate could trim fossil fuel tax breaks if and when members get serious about passing an energy bill later this year. But consider it a long shot.
The American Petroleum Institute has been in high gear, spinning the potential end of government largesse as “energy taxes.” As Coral Davenport noted in Politico, even what has now been confirmed as the worst accidental oil spill in world history probably won’t be enough motivation to change the way business is done on Capitol Hill:
The question is, will the momentum of spill backlash be enough to overcome the might of the oil lobby, which gave $13.9 million to Congressional candidates in the 2010 election season — 71 percent of which went to Republicans, according to the Center for Responsive Politics. Over the past 20 years, the industry has given a total of $252 million to members of Congress, 75 percent to Republicans.
That’s the way the credits crumble: But the tide may be turning against at least one energy industry pumped up by federal dollars: Corn ethanol gets about $6 billion a year in tax credits. The credits are scheduled to run out at the end of the year and there’s growing sentiment to let it happen. Big Corn claims that without the breaks, U.S. ethanol production will plummet and, of course, jobs along with it. But a study by the Center for Agricultural and Rural Development disagrees.
And, writes Josh Harkinson in Mother Jones, farming for ethanol isn’t exactly an environmental godsend:
Switching from oil to ethanol to save the Gulf would be like switching from cheeseburgers to cocaine to save your heart. Agricultural runoff from ethanol production fuels the Gulf’s Dead Zone, a New Jersey-sized pollution plume that may be worse for the marine environment in the long run than BP’s oil.
Kernels of truth: These days you’re a lot more likely to hear arguments for ethanol to make it on its own.
There’s this from an editorial in the San Antonio Express-News:
What is the nation getting for its money? The CBO says it costs taxpayers $1.78 to replace 1 gallon of gasoline with 1 gallon of ethanol. The subsidies equal the price of about two-thirds of a gallon of gasoline. That humongous support might be worthwhile if it produced some corresponding benefits. But on the environmental front, CBO estimates that its costs at least $750 to cut 1 ton of carbon dioxide emissions with ethanol.
And this from The Chicago Tribune:
With the national debt soaring, the government needs to wean the biofuel industry from its dependence on federal subsidies. Biofuels have always sounded better during the Iowa caucuses than they have performed in reality.
And finally, a swipe from The Washington Post:
At this point, the question should not be whether to a
llow corn ethanol’s tax incentives and trade protections to expire. The debate should be about why corn ethanol deserves any federal protection at all. There are certainly more effective ways to reduce oil consumption and greenhouse emissions.
Hey, but we still love ya with salt and butter.