No, Fossil Fuels Are Not Being “Subsidised”

[rangerrebew]

No, Fossil Fuels Are Not Being “Subsidised”
by David Turver 28 October 2024 11:21 AM

Whenever discussing renewables subsidies on the internet, there is a form of Godwin’s Law that means it is inevitable that someone will come along and say: “Ackshually, fossil fuels are subsidised more than renewables,” or words to that effect, as shown in this example. I have often thought the claim to be bogus, but until now had never dug into the detail to prove the case one way or the other.

Energy is one of the elementary foundations of modern society. Almost any activity you can think of requires energy input of some type or other. Factories need energy to make things. Offices need energy for heating, lighting, cooling and running computers, as do our homes. Hospitals need energy to run operating theatres. We need energy to go to work or visit friends and family, whether we travel by car or train. We need energy to do the family shopping, cook, to travel to the gym, cinema, or restaurant. Energy is fundamental to every economic and social interaction, so it would not be surprising if energy were subsidised. Expensive energy is like a tax on our very existence, so taxes on energy act as a drag on society.

It is therefore vital that we get to the bottom of the claimed fossil fuel subsidies in the U.K.

https://dailysceptic.org/2024/10/28/no-fossil-fuels-are-not-being-subsidised/

[Smokin Joe]

Funny, I have heard that claim about the US as well. But we didn't even make the top 25...either.

[Elderberry]

Fossil Fuel Subsidies

https://www.imf.org/en/Topics/climate-change/energy-subsidies

The below figure shows estimates of current and efficient fuel prices of major fuels for all the Group of Twenty (G20) countries and selected other countries in 2021-22. Retail prices generally cover the supply costs but rarely environmental costs, with the largest price gaps generally for coal, followed by diesel, diesel, and gasoline. Coal has the largest external costs due to significant emissions of greenhouse gas and harmful local air pollutants, while road fuel use results in large congestion and accident costs. Natural gas is relatively less polluting, but also rarely taxed.

[Smokin Joe]

"Environmental costs"? You mean the damage allegedly done by the release of CO2 during combustion? Quantifying that assumes damage is actually done by CO2.

Subsidy: money given by government to produce or reduce the purchase price of something that otherwise would not be produced. or...given to reduce the production of a commodity to prevent price collapse (control of supply).

I don't see standard deductions taken by other industries, such as operating expenses, an alleged price break on lease sales, even lowball royalty agreements as subsidies, because those are either ordinary deductions or just piss poor negotiating to establish royalty and/or lease agreements. Leases are usually sold on a bid basis, anyway. Either way, if a commodity is being subsidized, the price point would be below the supply cost.

Pollution costs only matter if the government is paying to clean those up, without some sort of subrogation. There are fines, etc. and occasionally direct payments from lawsuits, but generally, that is not a result of best industry practices, and rather, the result of accidents. For instance, the easiest numbers to beat out of Google's AI, showed 11 blowouts in ND since 2006, of 11,000 wells drilled. While 0.1% seems good, It can be improved, and I don't have any numbers on the amount, or whether these were drilling rigs or well servicing activities, nor even what fluids (nor how much) were released. Those have costs associated with them, but the State will be asking for money over that, not handing it out. It falls under accidents, and the cleanup costs fall on the oil company.

"Global Warming" costs are patent nonsense. Much may be blamed on that, but none of it is proven, and not for lack of trying.

In the US, the price point is just above supply costs, not below. If fuels here were subsidized, the price point would be below supply costs, because the Government (taxpayers) would make up the difference.

[Elderberry]

Fact Sheet | Fossil Fuel Subsidies: A Closer Look at Tax Breaks and Societal Costs (2019)

https://www.eesi.org/papers/view/fact-sheet-fossil-fuel-subsidies-a-closer-look-at-tax-breaks-and-societal-costs#1

Table of Contents
•   U.S. Tax Subsidies to the Fossil Fuel Industry
•   Fossil Fuel Research, Development, and Deployment
•   Financing Fossil Fuel Projects Abroad
•   Externalities and Social Costs of Fossil Fuels
•   Conclusion

There is a long history of government intervention in energy markets. Numerous energy subsidies exist in the U.S. tax code to promote or subsidize the production of cheap and abundant fossil energy. Some of these subsidies have been around for a century, and while the United States has enjoyed unparalleled economic growth over the past 100 years—thanks in no small part to cheap energy—in many cases, the circumstances relevant at the time subsidies were implemented no longer exist. Today, the domestic fossil fuel industries (namely, coal, oil and natural gas) are mature and generally highly profitable. Additionally, numerous clean and renewable alternatives exist, which have become increasingly price-competitive with traditional fossil fuels.

The 116th Congress is weighing potential policy mechanisms to reduce the impact of climate change and cap global warming to an internationally agreed upon target of no more than 2 degrees Celsius (3.6 degrees Fahrenheit). As a result, fossil fuel tax subsidies, as well as other mechanisms of support, have received additional scrutiny from lawmakers and the public regarding their current suitability, scale and effectiveness. Indeed, the subsidies undermine policy goals of reducing greenhouse gas emissions from fossil fuels.

The United States provides a number of tax subsidies to the fossil fuel industry as a means of encouraging domestic energy production. These include both direct subsidies to corporations, as well as other tax benefits to the fossil fuel industry. Conservative estimates put U.S. direct subsidies to the fossil fuel industry at roughly $20 billion per year; with 20 percent currently allocated to coal and 80 percent to natural gas and crude oil. European Union subsidies are estimated to total 55 billion euros annually.

Historically, subsidies granted to the fossil fuel industry were designed to lower the cost of fossil fuel production and incentivize new domestic energy sources. Today, U.S. taxpayer dollars continue to fund many fossil fuel subsidies that are outdated, but remain embedded within the tax code. At a time when renewable energy technology is increasingly cost-competitive with fossil power generation, and a coordinated strategy must be developed to mitigate climate change, the broader utility of fossil fuel subsidies is being questioned.

[catfish1957]

One point that gets overlooked, is not only that the oil industry isn't being subsidized, it is having to compete in the world in an uneven playing field. U.S. and Europe have signifiantly more honerous, and in a lot of cases pointless regulatory burden.

But you won't hear that with the MSM.

[Smokin Joe]

I am referring to the US, first off. I made up my mind early on that I would use my ability as a geologist to find oil and gas here. I made a 45+ year career of that.
From the website of EESI, your source:

Overseas Private Investment Corporation (OPIC). OPIC is the U.S. Government’s development finance institution, which supports American businesses in emerging markets abroad. OPIC provides “investors with financing, political risk insurance, and support for private equity funds." Between 2010 and 2015, OPIC committed more than $6 billion in financing to renewable energy projects, and in 2008 set a target to reduce greenhouse gas emissions from new projects by 50 percent by 2023.

Financing renewable energy projects is not a "fossil fuel subsidy". The rest went to other countries for their energy projects (however they spent it), again, not here.

United States Export-Import Bank (EXIM). EXIM is the credit agency of the United States government, providing credit to facilitate the export of American goods and services. While President Obama’s 2013 Climate Action Plan called for an end to government funding for overseas coal-fired power plants (with limited exceptions where no viable alternatives exist or where CCS technology is utilized), EXIM continues to fund fossil energy development overseas.

Welfare giveaways to foreign countries don't count here.

The Social Cost of Carbon reflects the negative societal impacts of climate change (including the spread of diseases, decreased food security, coastal vulnerabilities, and public health costs), which is caused by manmade carbon emissions.

EESI advances science-based solutions for climate change, energy, and environmental challenges in order to achieve our vision of a sustainable, resilient, and equitable world.

No bias there.

There is no cite for the alleged billions of subsidies supposedly given to the "fossil fuel industry" here. Tax breaks? You mean like depreciation on equipment? (something every industry gets). If it isn't putting money in the coffers of the industry, I don't know how you would call it a subsidy. Repairs, maintenance, the cost of complying with the latest moving goalpost environmental standards imposed by Government, all should be deductible.
Just because the particular expense is unique to the industry, that doesn't mean it is a subsidy, it is still a business expense. The oil industry doesn't get to write off the flowers that went bad in the case like the florist, or the cost of flour like a baker, it has different expenses.

The rest of this makes the base assumption that climate change is human caused, and points the finger at the energy industry. The fallacy of "renewables" like wind and solar being reliable, or even less 'environmentally costly' than oil, gas, or even coal (not the only industry to dig big holes), has been discussed here before. Mostly, it's just NIMBY-ing the emissions to plug in a car elsewhere and claim some sort of environmental cleanliness, without taking into account the pollution or environmental devastation or social cost to kids scratching for cobalt in the Congo, just to build the car or windmill or the solar panel.

But if you want to talk subsidies, $7,000 an EV, tax credits (not 'breaks, but credits) for installing solar, et fricking cetera.