[Graeme]

New report exposes billions per year in additional fossil fuel subsidies

A new report released today by Oil Change International and Earth Track exposes a largely unaccounted for subsidy to the fossil fuel industry, valued at roughly $4 billion per year and growing. New analysis quantifies the value of tax avoidance by the fossil fuel industry through a corporate structure called “Master Limited Partnerships (MLPs).” Though eliminated for most US industries more than a quarter century ago, special rules protected eligibility for fossil fuels, and have allowed a growing range of oil and gas activities to escape corporate income taxes entirely.

The report, entitled “Too Big to Ignore: Subsidies to Fossil Fuel Master Limited Partnerships,” finds that the oil, gas, and coal sectors have increasingly dominated the MLP universe, now comprising well over three-quarters of the total. Existing estimates of the taxpayer costs associated with fossil fuel MLPs are deceptively low, reducing the pressure to end this tax break once and for all.

The report can be found here: http://bit.ly/FossilMLPs

MLPs, such as those created by Enbridge, Sunoco, and TransCanada, not only enable firms to escape corporate income taxes on profits, but also to delay most tax payments on distributions to partners by many years. As Forbes magazine has said, MLPs are an “income and a tax shelter rolled into one investment.”

The MLP structure, according to the new report, cost the US treasury as much as $13 billion in lost tax revenue between 2009 and 2012, a figure six times larger than previous estimates. Fossil fuel interests continue to convert to MLPs at an alarming rate through asset spin-offs, mergers, and by seeking expanded eligibility granted not only by Congress, but also through rather secretive IRS rulings.

priceofoil

[Graeme]

Fossil fuel subsidies dwarf renewables support, favour rich - report

Mounting global fossil fuel subsidies distort the price of carbon, favour the rich in the developing world and amount to six times as much as subsidies for renewable sources of energy, according to a new report.

“If their aim is to avoid dangerous climate change, governments are shooting themselves in both feet,” wrote Shelagh Whitley, author of the report and a research analyst for the Overseas Development Institute (ODI) based in London.

The report was released on Thursday, days before member nations of the U.N. Framework Convention on Climate Change meet in Warsaw, Poland, to discuss how to work toward a new climate deal in 2015.

The report cited the International Energy Agency’s 2011 estimate that global subsidies totaled $523 billion and were rising. Whitley said they were closer to $600 billion, just a year later in 2012.

Among the 11 top rich-country emitters, including the United States, UK and Russia, fossil fuel subsidies amounted to $112 per person in 2010, according to an ODI estimate.

In some cases, fossil fuel subsidies take up significantly more of countries’ budgets than spending on social services. The report said Egypt, Indonesia, Pakistan and Venezuela all spent at least twice as much on subsidies than on public health.

Although G20 countries have pledged to phase out their fossil fuel subsidies, the report called for them to set “clear and ambitious goals”, including a plan to eliminate all subsidies by 2020.

An important step toward that goal is to create a common definition for fossil fuel subsidies, the report said. “What’s important is whatever you count, make that really clear,” Whitley said.

She gave the example of the International Monetary Fund (IMF), which includes failing to factor the cost of pollution - something most countries do not do - in its own estimates of subsidies.

trust

[arez9438]

I can't imagine how low the US will fall in another four years

[ROCKMAN]

Lots of “freeloaders" out there. From http://www.cbpp.org/cms/?fa=view&id=3948

Costing at least $70 billion a year, the mortgage interest deduction is one of the largest federal tax expenditures, but it appears to do little to achieve the goal of expanding homeownership. The main reason is that the bulk of its benefits go to higher-income households who generally could afford a home without assistance: in 2012, 77 percent of the benefits went to homeowners with incomes above $100,000. Meanwhile, close to half of homeowners with mortgages — most of them middle- and lower-income families — receive no benefit from the deduction. Three major bipartisan panels have proposed to convert the deduction to a credit and lower the maximum amount of interest it covers. These reforms would be major improvements over current law and would generate significant additional revenue.

[Graeme]

Fossil Fuel Subsidies Are Back Up To 2008 Levels

The exact worth of massive global fossil fuel subsidies is incredibly hard to figure. There’s no real consistency in the definitions of subsidies, or how they should be calculated. As a result, estimates of global subsidy support for fossil fuels vary widely.

According to a new analysis by the Worldwatch Institute, these estimates range from $523 billion to over $1.9 trillion, depending on what is considered a “subsidy” and how exactly they are tallied.

Worldwatch Institute research fellow Philipp Tagwerker, who authored the brief, explains:

The lack of a clear definition of “subsidy” makes it hard to compare the different methods used to value support for fossil fuels, but the varying approaches nevertheless illustrate global trends. Fossil fuel subsidies declined in 2009, increased in 2010, and then in 2011 reached almost the same level as in 2008. The decrease in subsidies was due almost entirely to fluctuations in fuel prices rather than to policy changes.

In other words, though the estimates vary widely, they all agree that fossil fuel subsidies are back up to the record levels they were at in 2008, before the financial crisis caused a temporary dip. So while world leaders, including President Obama, talk about ending subsidies that benefit one of the world’s richest industries, there hasn’t been any actual reduction.

cleantechnica

[Graeme]

Fossil Fuel Lobby Spent $213 Million Last Year to Influence US, EU Politicians

Fossil fuel industries spent an estimated $213 million lobbying U.S. and European Union decision makers last year, according to a new report published by Oxfam International on Friday.

In the U.S. alone, the estimated 2013 bill for lobbying activities by fossil fuel interests amounted to $160 million, said the report called Food, Fossil Fuels and Filthy Finance.

In addition, the 40-page report said, the global fossil fuel sector receives approximately $1.9 trillion in subsidies each year.

“In the absence of robust climate legislation, finance continues to flow unabated into the fossil fuel industry,” the report said. “At the current rate of capital expenditure, the next decade will see over $6 trillion allocated to developing the fossil fuel industry.”


“The lack of necessary government ambition to shift away from fossil fuels results in continued investment by the global financial sector based on an assumption that fossil fuels are here to stay – buoyed by the rhetoric of the fossil fuel industry itself.”

Noting that sustainable low-carbon technologies are rapidly decreasing in cost and beginning to compete with dirty energy, the report said decentralized sustainable renewable energy also offers significant opportunities to provide more suitable and less costly energy access for the poorest and most marginalized communities.

“Governments globally could tip the balance in favour of a low-carbon future and send the right signals to unleash the finance for this transition through committing to phase out fossil fuel emissions by early in the second half of this century.”

desmogblog

[Graeme]

Reflections From Below The Fossil Subsidy Iceberg

As close observers have long suspected, governments historically underestimate the cost subsidies for fossil fuel exploration, development, and production. By far. The International Monetary Fund has just calculated far in a study distributed by its Fiscal Affairs department: How Large Are Global Energy Subsidies? (IMF working paper 15/105).

Here’s IMF’s basic reasoning. If you incorporate what governments have to pay to clean up after companies burn oil, coal, and natural gas for power, you see that this factor has not been counted in the economic equation of using fossil fuels. Humans have to counter emissions of carbon dioxide and other pollutants in order to combat their harmful effects (air pollution, the greenhouse effect, climate change, and related disaster response, normally considered “externalities”). Government is usually pegged as the industry’s housekeeper. Until recently, the costs of remediation have been invisible. It turns out that they are unbelievably high.

The IMF—sometimes a fairly conservative voice, considering its purpose—calls them “shocking.” Figuring in all necessary government actions to counter greenhouse gas emissions, global subsidies amount to not only the numbers usually cited (of around $500 billion a year), but to $5.3 trillion a year. The Guardian puts this government expense, which the public pays for, at $10 million per minute. In 2015, this total exceeds the amount all world governments spend on health. It shows that we price fuel remarkably low, considering its real cost, and that true subsidies are a far cry above the usual calculation.

cleantechnica

[EdwinSm]

My latest print copy of "The Economist" had the following about an IMF report on FF subsidies amounting to $5.3 trillion or 6% of global GDP (which is more than all government spending on health care).

The biggest subsidiser of fossil fuel is China at $2.3 trillion, followed by America ($700 billion), Russia ($335 billion), India ($277 billion) and Japan ($157 billion)

The article also stated

renewable energy subsidies (mostly in the rich world and not covered by the IMF paper) amount to a mere $120 billion, and would vanish if fossil fuel were taxed fully.

[vtsnowedin]

Post no.1 of this thread has US subsidies for fossil fuel at four billion a year. Moving down to post No. 8 it has jumped to $700 billion? Somebody's math is way off. Considering that the USA consumes some 18 million barrels of oil a day which at $3.00/ gal works out to $830 Billion a year and still burns 940 million short tons of coal a year at about $95/ton for another $89 billion it looks like consumers are making out alright with all this subsidization.

[Outcast_Searcher]

Post no.1 of this thread has US subsidies for fossil fuel at four billion a year. Moving down to post No. 8 it has jumped to $700 billion? Somebody's math is way off.

Or someone is using different assumptions. Or not defining their terms. Or not providing the full definition of what the assumptions/terms are.

For example, should what the US spends protecting its oil interest militarily, but which aren't paid for (since the cost is just added to the debt) be considered an oil subsidy? I think so, and it would amount $hundreds of billions annually. Of course, the US bears the whole cost and the whole oil importing (from the Middle East) world benefits, but it's still a subsidy. (Like so many subsidies, who pays for it is wildly different than who benefits). You get a few items like that involved, and the "right" amount can truly be staggeringly different.