A Large and Growing Chorus is Calling for an End to Fossil Fuel Subsidies

As we move past the threshold of 400 parts per million of atmospheric CO2, fossil fuel subsidies appear even more unconscionable. These subsidies could be used to finance energy efficiency and renewable energy. In addition ending subsidies could   decrease carbon pollution by 13 percent.

A number of prominent organizations including the International Monetary Fund (IMF), the World Bank, and the United Nations (UN) are calling for an end to fossil fuel subsidies.

In March, 2013, the International Monetary Fund (IMF) released a report that called for an end to fossil fuel subsidies. The IMF report titled, Energy Subsidy Reform: Lessons and Implications, indicates that these subsidies account for almost nine percent of all annual country budgets, amounting to a staggering $1.9 trillion.

In April 2013, World Bank President Jim Yong Kim has urged the world’s environmental ministers to implement a five-point plan that includes ending fossil fuel subsidies.

A United Nations Environment Programme (UNEP) report titled Green Economy and Trade-Trends, Challenges and Opportunities, recommended eliminating subsidies that encourage unsustainable production and establishing pricing policies that take account of the true environmental and social costs of production and consumption.

Support for ending fossil fuel subsidies comes from a wide range of sources including:
President Obama has repeatedly called for an end to more than $4 billion a year in subsidies for the fossil fuel industry, arguing that these “inefficient fossil fuel subsidies… impede investment in clean energy sources and undermine efforts to address the threat of climate change.”

At a recent meeting in Bonn of more than 600 government officials and NGOs US negotiators pushed nations to end coal, gas and oil subsidies by 2020, a step they said could cut emissions 10 percent under business-as-usual levels by mid-century.

American support for ending fossil fuel subsidies is strong across the political spectrum. In a 2011 survey titled Public Support for Climate & Energy Policies Yale researchers found that 70% of Americans opposed federal subsidies for the fossil fuel industry, including Republicans, Independents, and Democrats. 70 percent of Americans say global warming should be a very high (12%), high (25%), or medium (33%) priority for the president and Congress, including 44 percent of registered Republicans, 72 percent of Independents and 85 percent of Democrats. Opposition to federal subsidies for the fossil fuel industry, include 67 percent of registered Republicans, 80 percent of Independents, and 68 percent of Democrats. Further, 54 percent of Americans oppose subsidies to the ethanol industry.

A fact sheet by 350.org lists the money that would be saved by eliminating fossil fuel subsidies:

  • $14 billion saved by eliminating the intangible drilling deduction 
  • $12 billion saved by repealing a 2004 law that allows fossil fuel corporations to take deductions aimed at helping American manufacturers by claiming they are manufacturers 
  • $6.8 billion saved by closing the loophole that allows corporations like BP to deduct money they spend cleaning up their own oil spills and paying damages 
  • $2.4 billion saved by stopping fossil fuel companies from investing through Master Limited Partnerships, an option not available to clean energy businesses 
  • $3.7 billion saved by shutting the federal Office of Fossil Energy 
  • $10.6 billion saved by recouping lost royalties for offshore drilling in public waters

The Department of the Interior has given almost $30 billion in government handouts to the coal industry through its coal leasing program. Through noncompetitive “auctions,” the Department sells the rights to publicly-owned coal to coal companies for a fraction of their worth. And there’s almost four billion more tons of this coal that the DOI could give away in the coming years.

Greenpeace has initiated a campaign to tell Interior Secretary Sally Jewell "put an end to these coal industry handouts for good." and keep them from "ramping up efforts to export federally-owned coal abroad....I call on you to put an immediate moratorium on new federal coal leasing and to bring the federal coal leasing program in line with President Obama's call to respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations."


WWF Global Energy Policy Director Stephan Singer says industrialized countries are responsible for the lion’s share of fossil fuel subsidies and should act now to stop them.

“If they were to abolish those subsidies and reform towards renewables and energy efficiency investments, it would more than triple present global investment into renewables,” said Singer. “And that is what is needed for a world powered by 100 percent sustainable renewables.”

2012 analysis shows that fossil fuel subsidies in rich countries are, on average, five times greater than those same countries’ pledges towards climate finance.

Other sources say that fossil fuels are subsidized at almost six times the rate of renewable energy. From 2002 to 2008, the US federal government gave the fossil fuel industry over $72 billion in subsidies while the renewable industry only received $12.2 billion.

© 2013, Richard Matthews. All rights reserved.

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