US [officially] spends $8.1 billion a year on fossil fuel subsidies

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Autoblog  /  September 27, 2016

That $7,500 that the US federal government provides in subsidies for each new electric vehicle? That may be small potatoes compared to the perks two of the world's largest governments are giving to Big Oil. Of course, estimates depend on who's doing the counting.

The US and China in late 2013 both agreed to conduct reciprocal peer review reports of how much each government was funding the fossil-fuels industry, and not surprisingly, those numbers are pretty huge.

Specifically, China funds fossil fuels to the tune of $14.5 billion a year, while the US provides $8.1 billion a year in Big Oil perks, Green Car Reports says.

The numbers were released in a report that was recently presented at the G20 nations conference in Hangzhou, China.

More tellingly, many of such funding activities were classified as "inefficient" examples of upstream activities such as exploration, development, and extraction of fossil fuels.

The 50-page report can be found here.

The US subsidy estimate dwarfed an estimate released by the New York Times last month. Citing the Council on Foreign Relations, the Times said the US spends about $4 billion on oil subsidies a year.

But those numbers are downright conservative compared to a 2013 study from the Earth Policy Institute, which is obviously going to take a pro-green approach to things. According to that report, global governments provided $620 million worth of fossil-fuel subsidies in 2011. About 85 percent of that total was geared towards consumption by providing artificially low prices for the end user.

To put those statistics into further context, a Los Angeles Times report estimated last year that Elon Musk's Tesla Motors and SpaceX, and SolarCity (where Musk is chairman) had taken $4.9 billion in subsidies since they'd been in business.

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U.S., China peer-reviewed reports lay out huge subsidies for fossil fuels

Green Car Reports  /  September 22, 2016

Critics of the renewable-energy industry argue that it's unfair that energy sources such as wind and solar often benefit from government subsidies.

But the volumes and amounts of subsidies received by the fossil-fuel industry are substantial, as new analysis shows.

In December 2013, the U.S. and China announced plans to undertake a reciprocal peer review of their countries' fossil-fuel subsidies.

The results of those studies, released this month at a meeting of the G20 nations, show that the U.S. and China provide around $20 billion in subsidies to the fossil-fuel industry each year.

The U.S. report (pdf) identified 16 "inefficient" fossil-fuel subsidies for exploration, development, and extraction of fossil-fuel sources that could be phased out or reformed.

The Chinese report found nine subsidies for similar activities, but also included subsidies that benefited specific groups of users, such as fishermen and taxi drivers.

All told, subsidies were estimated at $8.1 billion annually for the U.S., and $14.5 billion for China.

In addition to the listed subsidies, the U.S. report also took note of related government spending that benefits the fossil-fuel industry.

It noted that while subsidies for the bulk transportation of fossil fuels by rail or barge were not specifically identified, much of the infrastructure that supports these activities receives at least some taxpayer funding.

It also noted that the cost of maintaining the U.S. Strategic Petroleum Reserve—the world's largest emergency supply of crude oil—is borne entirely by the government, not by the oil industry itself as in other countries.

Only one fossil-fuel subsidy—the Low Income Home Energy Assistance Program (LIHEAP)—was not marked "inefficient" by reviewers, and thus escaped a recommendation for elimination or alteration.

The U.S. has an incentive to cut the subsidies deemed "inefficient," at least in theory.

In 2009, the G20 nations agreed in principle to phase out "inefficient fossil-fuel subsidies," and the smaller G7 group set a deadline of 2025 at a meeting in Japan back in May.

But cutting most U.S. subsidies will require Congressional legislation, something that seems unlikely to happen any time soon given the current heated political climate in Washington.

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US and China release fossil fuel subsidy peer reviews

The Guardian  /  September 20, 2016

The world’s biggest polluters have released their fossil fuel subsidy peer reviews and the obstacles to reform are clear: the US will wait on Congress, while China will wait on China.

The documents, released on Monday by China’s G20 presidency, reveal the long road ahead. The G20 has commited to eliminate “inefficient” subsidies for coal, oil and gas in the medium term and the G7, of which the US is a member, has tightened the timeline to 2025.

Of 16 policies marked for elimination by the US, all but three concluded with the sentence: “The United States Congress must pass enabling legislation for this proposal to become law”.

Since 2010, the Obama administration has put forward 11 proposals to eliminate fossil-fuel subsidies. None have yet passed the house.

In a pointed observation about the drawbacks of the US political structure, a review panel of officials from China, Germany, Mexico, and the Organization for Economic Cooperation and Development (OECD) noted: “A result of this system is that political processes can only happen if a sufficient number of citizens are informed about the case for reform and are motivated enough to express their views to their representatives in Congress.”

The reviewers called upon the administration to deliver an “effective communication strategy” to convince constituents of the need for subsidy reform.

The US subsidies identified for culling included a $52 million excise exemption for tar sands, the most carbon intensive source of oil. Like many of the subsidies, the exemption is earmarked for a cut, but waits on the approval of the Republican-controlled Congress.

The review process worked from a definition for subsidies similar to the OECD’s. The argument over how subsidies are defined is vexed. For example, the IMF believes they should account for the extra burden on public health systems caused by pollution. This leads them to estimate the total public spend on fossil fuels to be around $5.3tn each year. The OECD’s narrower definition estimates it to be $160-200bn.