Fossil Fuel Subsidies: When Taxpayer Dollars Subsidize Environmental Destruction

Billions of taxpayer dollars are funneled into certain industries via government subsidies. In the case of the coal, oil and gas industries, fossil fuel subsidies are helping to bankroll the creation of carbon emissions.

  • U.S. federal energy subsidies valuing $74 billion are given to fossil fuel industries each year. Shifting those subsidies to sustainable industries could help reduce carbon emissions.
    Photo By Fotolia/Jim Parkin

As the Earth Council report “Subsidizing Unsustainable Development” pointed out, “There’s something unbelievable about the world spending hundreds of billions of dollars annually to subsidize its own destruction.”

One way to correct this imbalance is by tax shifting: raising taxes in certain situations so the price to carry out environmentally destructive activities begins to reflect their true cost, and offsetting this with an overall reduction in income taxes. Another way to achieve this goal is to shift government subsidies away from unsustainable practices.

On the climate front, scores of countries could cut carbon emissions by eliminating fossil fuel subsidies. We can look to Iran for an example of extreme subsidies, as it has a history of pricing oil for domestic use at about one-tenth the world price, strongly encouraging car ownership and thus gas consumption. If its $37 billion annual subsidy were phased out, the World Bank estimates, Iran’s carbon emissions would drop by a staggering 49 percent. The move would also strengthen the economy by freeing up public revenue for investment in the country’s economic development.

Iran is not alone. The Bank projects that removing energy subsidies would reduce carbon emissions in India by 14 percent, in Indonesia by 11 percent, in Russia by 17 percent and in Venezuela by 26 percent.

Some countries are already doing this. Belgium, France and Japan have phased out all coal subsidies. Germany reduced its coal subsidy from a high of 6.7 billion euros in 1996 to 2.5 billion euros in 2007, and coal use dropped by 34 percent between 1991 and 2006. Germany plans to phase out its coal subsidies entirely by 2018. As oil prices have climbed, a number of countries — including China, Indonesia and Nigeria — have cut a hefty fiscal cost by eliminating or greatly reducing subsidies that held fuel prices well below world market prices.

While some leading industrial countries have been reducing fossil fuel subsidies — notably for coal, the most climate-disrupting fuel — the United States has increased its support for fossil fuel industries. Doug Koplow, founder of Earth Track, an organization that tracks environmentally harmful subsidies, calculated in a 2006 report that annual U.S. federal energy subsidies have a total value of $74 billion to these industries. Of this, we, the taxpayers, gave the oil and gas industry $39 billion, coal $8 billion and nuclear $9 billion. Koplow notes that today, these numbers would likely be higher. Even though we face an urgent need to shift to less-polluting, sustainable energy sources and conserve oil resources, Congress has failed to enact much-needed legislation that mandates this, so U.S. taxpayers continue to subsidize the primary contributors to disruptive climate change.

11/22/2013 11:08:54 AM

First, 74billion is not hundreds of billions. Second, we subsidize wind which kills thousands of birds without any fines are consequence. Ethanol is a joke, destroying ecologies because no one wants to move from corn to other plant based methods. We have subsidized solar and it is getting better, however, solar panels depend on the petro chemical industry also and if fossil fuels are choked the price of solar panels would go up as drilling and mining are now subsidized by the consumption of fossil fuels. As for our belts, shoes and other articles of clothing, unless we go totally back to leathers and furs, we would have some awfully uncomfortable clothing. Until Utopia comes folks it an uphill battle that we can only win with our personal choices voiced through our pocketbooks...

11/20/2013 7:53:33 AM

Climate change/global warming is a hoax,it's all about money.



Fall 2021!

Put your DIY skills to the test throughout November. We’re mixing full meal recipes in jars, crafting with flowers, backyard composting, cultivating mushrooms, and more!


Subscribe Today - Pay Now & Save 64% Off the Cover Price

50 Years of Money-Saving Tips!

Mother Earth NewsAt MOTHER EARTH NEWS for 50 years and counting, we are dedicated to conserving our planet's natural resources while helping you conserve your financial resources. You'll find tips for slashing heating bills, growing fresh, natural produce at home, and more. That's why we want you to save money and trees by subscribing through our earth-friendly automatic renewal savings plan. By paying with a credit card, you save an additional $5 and get 6 issues of MOTHER EARTH NEWS for only $12.95 (USA only).

You may also use the Bill Me option and pay $17.95 for 6 issues.

Canadian Subscribers - Click Here
International Subscribers - Click Here
Canadian subscriptions: 1 year (includes postage & GST).

Facebook Pinterest Instagram YouTube Twitter flipboard

Free Product Information Classifieds Newsletters