[Graeme]

The Tax Breaks That Are Killing the Planet

ExxonMobil, the world’s largest oil company, hauled in a $32.6 billion profit last year. Chief executive Rex Tillerson got a 3 percent bump in his pay package, sending it above $28 million. And today the company gets its annual boost from the federal government: an estimated $600 million in tax breaks.

All told, the government gifts as much as $4.8 billion to the oil industry each year, more than any other country. Much of that comes not as direct handouts but instead via loopholes in the tax code; deductions for depleting oil reserves, for example, and write-offs for the expense of drilling a new well. These reflect a long-past era in which oil exploration was financially risky, and prices were low. Now oil prices and profits are high, and the government is losing revenue while promoting the continued exploitation of carbon-intensive fuels. In the face of a changing climate and a constrained domestic budget, the lunacy of such preferential treatment is hard to overstate.

“Perverse” is the word the Intergovernmental Panel on Climate Change found for such policies in its latest report, which was released in full on Tuesday. Globally, subsidies for fossil fuel production—amounting to $1.9 trillion in 2011, or 8 percent of government revenues, according to the International Monetary Fund—“prove to increase emissions and put heavy burdens on public budgets,” reads the report.

On the other hand, rolling them back could be a key part of a serious climate agenda. The IMF estimates that eliminating fossil fuel subsidies could lower emissions by 13 percent. That general principle, if not the exact figure, is supported by the IPCC, which wrote, “Lowering or removing such subsidies would contribute to global mitigation, but this has proved difficult.”

“Difficult” may be an understatement in the United States. As a recent article at Mother Jones lays out, the energy industry wields considerable influence in Washington. In the last fifteen years oil and gas companies spent more than $1.4 billion on lobbying, employing nearly 800 lobbyists, many of them culled from congressional offices. That expense is actually a shrewd investment: every dollar the five largest oil companies spend on lobbying reflects $53 in tax breaks. The industry also leverages millions in donations to candidates and political ads during each election cycle, discouraging politicians from taking a hard line on tax breaks.

Government support for fossil fuels goes beyond the tax code. Another de facto subsidy comes from the Interior Department’s failure to collect proper royalties on domestic oil and coal. The government has lost as much as $14.7 million because royalties are not collected on offshore leases in the Gulf of Mexico. In Wyoming’s Powder River Basin, below-market sale prices and an uncompetitive bidding process for coal reserves has cost taxpayers as much as $30 billion over the past two decades, while helping to prop up a collapsing industry. There’s also evidence that the federal coal program is failing to properly collect royalties on coal sold overseas. While President Obama may not be able to do much about the tax code unilaterally, his Interior Department certainly has the authority—in fact, the obligation—to reform its coal-leasing program.

Finally, there is a more deeply hidden giveaway to the fossil fuel industry, the most critical of oversights: the fact that companies don’t pay for the damages caused by their products—their external costs. While every citizen will pay for climate change, as those living near extraction and refining sites have long borne the burden of local pollution, companies get a free pass on their carbon emissions. This imbalance is what a carbon tax is designed to remedy.

Closing loopholes in the tax code would be only a small part of an aggressive climate agenda—particularly since it’s unlikely that eliminating those subsidies would affect global oil prices significantly. Still, those tax breaks represent billions that could be spent elsewhere, such as investment in renewables. The IPCC report concluded that subsidies, directed properly, can be an effective tool for slowing down global warming by helping low-carbon technologies and products overcome their competitive disadvantage in relationship to fossil fuels. Federal support for renewables now outstrips benefits for fossil fuels, but it’s still not comparable to the help that the government gave the oil industry in its early days. Important incentives, like the wind energy tax credit, have been allowed to expire. Furthermore, our national infrastructure is designed for the age of cheap fossil fuels, making it even more difficult for alternative energy to compete.

The best chance for closing the loopholes—and, perhaps, for imposing a carbon tax—is if Congress overhauls the tax code, something both parties have indicated an interest in. But even the best chance is a slim one given the cabal of climate deniers in the House, and a broader reluctance to challenge energy interests. If climate change seems like a problem too big to to approach, perhaps start here: elections matter.

commondreams

[americandream]

I'm professionally a tax lawyer and of the mind that these tax breaks are here till the end, even if they go through a period of be taken out of the stat books. As capitalism's need for energy increases, nothing will stop the momentum of accumulation. Even your forelorn hope at seeing the rise of a benign form of accumulation is testimony of the power of this system over the mind.

[Unit30Bull]

Much of that comes not as direct handouts but instead via loopholes in the tax code; deductions for depleting oil reserves, for example, and write-offs for the expense of drilling a new well.

Just to give readers some more info on the tax deductions because most people have no idea what they really are.

What are IDCs?

Quite simply, Intangible Drilling Costs (IDCs) represent all expenses an operator may incur at the wellsite that don’t – by themselves – produce a physical asset for the producer. In the oil and natural gas business, those costs include things like labor and site preparation, renting drilling rigs – costs that have no salvage value after they are spent.

The standard IDC tax deduction – which has been around in one form or another for 100 years — allows producers to recover those investment costs quickly and reinvest them in exploring for, and hopefully producing, new American oil and natural gas supplies. Since 1913, IDCs have allowed producers to invest literally hundreds of billions of dollars in finding and delivering new energy that might not have been available without them. For America’s 7,000-plus independent oil and natural gas producers (who drill more than 90 percent of the nation’s wells), IDCs can be deducted in the year they are spent or spread over 60 months. Independent producers are in the business of exploring for and producing oil and natural gas. The integrated companies (who have marketing or retail operations like gasoline stations) must amortize 30 percent of IDCs over 60 months and can deduct the remaining 70 percent in the year they are spent or spread them over 60 months.

Drilling a well does not guarantee resource production; the IDCs deduction enables America’s independent oil and gas producers to continue exploring even when a well is unsuccessful and reinvesting production revenues when they are. Independent producers reinvest as much as 150 percent of their US cash flow in new US projects. This investment and reinvestment in America’s vibrant oil and natural gas production sector supports the small businesses and the countless other industries and consumers who benefit from affordable, secure American energy.

Do Other Industries Get IDCs?

The terminology might be different, but IDCs are just like tax deductions available to many American industries – to farmers for fertilizer and to technology companies for research and development. Even bakeries have deductible costs. Their supplies—sugar, flour, eggs—are all tax deductible raw materials, along with labor costs. No matter the industry, these are all upfront costs facing nearly every American small business owner with no guaranteed return on investment. In fact, IDCs are no different than costs that are immediately deductible under the general tax law that applies to all business losses – vital deductions, not government handouts, that help American businesses.

Why Are IDCs Important For America?

IDCs were put in place to reflect the deduction of expenses specifically for oil and natural gas production – and that’s just what they do. Removing this 100-year-old tax provision from the code would not only strip away roughly 25 percent of the capital available for independent producers to continue looking for new oil and natural gas, but also diminish the many economic benefits created by those activities. Independent producers support over 4 million direct, indirect, and induced jobs – in the lower 48 states alone – while providing billions in revenue and taxes. In 2010 alone, onshore upstream taxes amounted to $67.7 billion.

What is Percentage Depletion?

The percentage depletion deduction has been a part of the U.S. tax code since 1926. Depletion is a form of depreciation for mineral resources that allows for a deduction from taxable income to reflect the declining production of reserves over time.

For oil and natural gas producers, percentage depletion is a small producer issue. Percentage depletion is only allowed for independent producers and royalty owners. It is calculated by applying a 15 percent reduction to the taxable gross income of a productive well’s property. The reduction is determined on a property-by property basis and is limited to the taxpayer’s first 1,000 barrels of oil (or 6,000 mcf of natural gas) of production per day. It is also capped at the net income of a well and limited to 65 percent of the taxpayer’s net income. Because of these restrictions, only small independent producers and royalty owners are users of the percentage depletion deduction.

However, believe it or not, our nation’s smallest wells collectively make up a significant portion of America’s oil and natural gas production. On average, these wells produce less than 15 barrels of oil per day, yet account for nearly 19 percent of U.S. oil production and less than 90 thousand cubic feet per day, yet account for 12 percent of U.S. natural gas. Percentage depletion enables smaller operations to recover some of the high costs associated with keeping these marginal wells up and running.

Why is Percentage Depletion Important?

The percentage depletion deduction is not a credit; it’s not a subsidy; it’s most certainly not a handout. This deduction is a standard part of the American tax code that supports the development of U.S. oil and natural gas—and an array of other mineral resources—that would otherwise be uneconomic to produce.
This provision also enables independent producers—businesses with an average of 12 employees—to retain revenues that are vital to future investment and operation of America’s oil and natural gas wells. Thanks to percentage depletion, these operators are able to retain their earnings and many are reinvesting 150 percent of their cash flow back into American energy development, strengthening our nation’s energy future while employing thousands of men and women across the nation. Royalty owners – men, women and children who live in all 50 U.S. states – also rely on this important tax provision and the value it confers upon the resources they own.

The International Energy Agency has projected that the U.S. could be the world’s largest oil producing country by 2020, providing valuable energy and national security benefits for the nation. Loss of percentage depletion would place marginal well production in jeopardy – threatening American energy development, federal and state revenues, and thousands of good-paying American jobs.

Why Can Percentage Depletion Exceed the Cost of the Well?

The short answer is: Congress wanted it that way. Before the percentage depletion deduction was created, only a deduction called “cost depletion” was allowed for mineral resources. Congress discovered that American mineral resources – including oil and natural gas – were being shut down and lost forever if only cost depletion was available. Congress created the concept of “value depletion” that ultimately took the form of percentage depletion. It led to robust development of American minerals and remains a key factor for many mineral development projects. For oil and natural gas production – despite all of the constraints and limitations – percentage depletion plays its significant role in keeping America’s marginal wells producing.

Why is the Passive Loss Exception an Issue?

The passive loss exception enables working interest owners in oil and natural gas production to achieve some parity between their investments and those of corporate shareholders. By counting any working interest investment losses as active instead of passive, investors are able to treat the normal business deductions from their investment in the same way that a corporation would. But the Obama Administration would repeal the passive loss exception.

Why was the Passive Loss Exception Created?

The passive loss exception reflects Congressional recognition that the Tax Reform Act of 1986 created an inequity. The Tax Reform Act divided investment income/loss into two baskets – active and passive. Moreover, the passive loss rules apply only to individuals; corporations pass the same deductions to shareholders as part of the overall value of the stock. If income/loss, arising from natural gas and oil working interests, were treated as passive income/loss, taxpayers would be significantly less willing to risk an investment in natural gas and oil development.

Most American wells today are drilled by small and independent companies, many of which depend on individual investors. There is no sound reason for Congress to enact tax rules that would discourage individual investors from continuing to participate in energy investments. The repeal of the working interest rule, therefore, would senselessly drive natural gas and oil investments away from individuals and toward corporations.

What is Active Versus Passive?

Passive income and loss are based on an activity in which the investor is not “materially” involved. According to the IRS, material involvement is on a “regular, continuous, and substantial” basis. For example, if an investor buys shares in a rental property – in which he or she is not actively involved in operating or maintaining – the investment is considered passive. This is the same for limited partnerships – a limited partner invests in the partnership but is not involved in the day to day activity and operations.

Limited partners are vital to the investment in oil and natural gas, spurring investment in American energy. Unfortunately, drilling a well does not guarantee resource production; yet the capital costs of exploration – successful or not – are extremely high. Because of the passive loss exception, working interests in oil and natural gas are removed from the passive income basket. In other words, all oil and gas working interests are considered active, even if the investor is not the operator of the drilling and production operations.
Importantly, investors in working interests are engaged in the very real activity of exploring for and developing oil and natural gas resources. Moreover, these investors are allowed deductions only for the actual expenses incurred and paid by them with respect their working interests. Working interest owners cannot deduct any expenses that have not actually been incurred by them and for which they are not entirely liable. By defining this income/loss as active, these investors and partners are able to continue advancing American energy exploration and production.

Why is Passive Loss Exception Important to American Energy?

The passive loss exception enables continued investment into American energy exploration, supporting the small businesses and the countless other industries and consumers who benefit from affordable, secure American energy. By allowing individual investors to participate actively in oil and natural gas production ventures, investment is able to continue where it would otherwise be lost.

[Plantagenet]

I'm amazed there still are tax breaks under the Obama administration for oil drilling and other activities that create jobs and produce energy for America.

I thought the Obama people had long ago diverted all those funds to support more foodstamps and unemployment benefits and things like that.

[Shaved Monkey]

Tax payer also pays for the military to ensure supply and increase the amount of private ownership of reserves.(democratisation)

[rockdoc123]

Just to give readers some more info on the tax deductions because most people have no idea what they really are.

indeed, something I have said several times on this forum but as usual some posters like Graeme like to pretend it never happened.

Without the ability to recover exploration expenditures rapidly companies would not explore. This is not something that is peculiar to the US but is pretty much standard in any country in the world that has a production sharing contract with foreign companies. It stimulates activity because the person putting the money on the table takes the risk, if he fails he gets nothing but if he is successful he at least gets to recover all of his costs and then a share of the profits after. Countries figured that this was the only way to move forward decades ago.....why use your own money at risk, use someone's else. By doing so you guaranty the necessary activity and you don't waste your own capital in a business that has the odds going against it's success. It is the smart thing to do. Different countries have various ways of making this work, some give cost recovery, some have low royalties, some pay your corporate taxes for you. No matter what they do it for the benefit of the countries economy.

And as I have mentioned a couple of times in the past Oil and Gas companies do not make huge profits after reinvestment generally. The marginal return in the oil and gas business is around 6% whereas in the high tech industry it is north of 30%. On one thread in days gone by someone was bemoaning the huge payments that Exxon former CEO got when he left without understanding that it amounted to about 1% of the market cap increase Exxon had undergone under his watch. I personally have a problem when these guys get rewarded for screwing up a company (and it happens because of their contracts) but have no problem when they get a piece of pie when successful. Unfortunately you take the good with the bad.

[Pops]

The tax breaks haven't even started yet.

Just a WAG but I'd say the biggest single variable cost of oil production is government. Whether it is 100% of profit as in the national oil companies, or some lesser percentage elsewhere, when the limits really kick in the taxes will fall. If nothing else, the latest spike has taught us that profit does indeed make oil.

Once the limits kick in and a few of the major IOCs wither the breaks will fly.

[Graeme]

Making a Killing: Oil companies tax avoidance and subsidies

Summary

At a time of both public service cutbacks and record-breaking profit-making by oil
companies , this briefing attempts to bring to light these transfers of wealth from the
public to the private sector, including:

1 Corporation tax avoidance. Shell, BP and Tullow all use similar tactics to avoid paying tax. Corporation tax in 2011 was set by HMRC at 26%. 1 While we have see the global profits
of UK oil companies increase greatly in the last decade, the amount of corporation tax they pay
in the UK seems to rise only marginally, or in some cases, even falls. Oil companies can avoid
paying tax by minimising the amount of profit that passes through the company’s UK books,
routing it through an international network of subsidiaries instead.

2 Tax breaks for North Sea oil and gas and (potentially) shale gas. George Osborne handed
hundreds of millions of pounds in tax breaks to oil companies responsible for 80% of recent
North Sea oil and gas projects . Similar tax handouts are expected for fracking (hydraulic
fracturing) enterprises.

3 External political and military support. At least four UK government departments
provide unconditional business support to oil companies, including military convoys, lobbying
and intelligence-gathering, with the frequent involvement of ministers and high-level civil
servants. While hard to quantify, the cost of just one diplomat iin the UK consulate in Basra was
£2mn per year.

4 Subsidised loans. The UK provides financial support to oil extraction and transportation abroad on preferential terms via the Export Credit Guarantee Department as well as International Financial Institutions (EBRD, European Investment Bank, World Bank Group)International oil companies channel
their cashflows through networks of subsidiaries, many in high secrecy offshore jurisdictions. BP and Shell are particularly committed to tax havens, with more tax-dodging subsidiaries than their competitors: 605 and 523 high-secrecy subsidiaries respectively. IOCs can also play off governments against each other, exploit international legal mechanisms (Tullow in Uganda), and local loopholes (BP
in Turkey) to avoid paying tax.Rather than providing fossil fuel companies with the financial incentives and political support to pursue ever more dangerous drilling, the UK government should prioritise the public well-being over the profits of these vast oil corporations by properly taxing them. The first step towards phasing out UK fossil fuel subsidies would be transparency: open government reporting that tracks and quantifies the subsidies.

platformlondon

[vtsnowedin]

Making a Killing: Oil companies tax avoidance and subsidies

Summary

At a time of both public service cutbacks and record-breaking profit-making by oil
companies , this briefing attempts to bring to light these transfers of wealth from the
public to the private sector, including:

1 Corporation tax avoidance. Shell, BP and Tullow all use similar tactics to avoid paying tax. Corporation tax in 2011 was set by HMRC at 26%. 1 While we have see the global profits
of UK oil companies increase greatly in the last decade, the amount of corporation tax they pay
in the UK seems to rise only marginally, or in some cases, even falls. Oil companies can avoid
paying tax by minimising the amount of profit that passes through the company’s UK books,
routing it through an international network of subsidiaries instead.

2 Tax breaks for North Sea oil and gas and (potentially) shale gas. George Osborne handed
hundreds of millions of pounds in tax breaks to oil companies responsible for 80% of recent
North Sea oil and gas projects . Similar tax handouts are expected for fracking (hydraulic
fracturing) enterprises.

3 External political and military support. At least four UK government departments
provide unconditional business support to oil companies, including military convoys, lobbying
and intelligence-gathering, with the frequent involvement of ministers and high-level civil
servants. While hard to quantify, the cost of just one diplomat iin the UK consulate in Basra was
£2mn per year.

4 Subsidised loans. The UK provides financial support to oil extraction and transportation abroad on preferential terms via the Export Credit Guarantee Department as well as International Financial Institutions (EBRD, European Investment Bank, World Bank Group)International oil companies channel
their cashflows through networks of subsidiaries, many in high secrecy offshore jurisdictions. BP and Shell are particularly committed to tax havens, with more tax-dodging subsidiaries than their competitors: 605 and 523 high-secrecy subsidiaries respectively. IOCs can also play off governments against each other, exploit international legal mechanisms (Tullow in Uganda), and local loopholes (BP
in Turkey) to avoid paying tax.Rather than providing fossil fuel companies with the financial incentives and political support to pursue ever more dangerous drilling, the UK government should prioritise the public well-being over the profits of these vast oil corporations by properly taxing them. The first step towards phasing out UK fossil fuel subsidies would be transparency: open government reporting that tracks and quantifies the subsidies.

platformlondon

Again Graeme I think you are hyperventilating over small potatoes. If an oil company has two legal ways to handle money overseas and one incurs less tax loss to the stock holders they have the responsibility to choose the lower tax option. If the government did not aid the oil industries over seas exploration and production efforts the supply would be less certain so prices would be both higher and more volatile. And then there is the overall cost of these subsidies divided into the total amount of oil consumed in the UK. What does it come down to five pence a gallon perhaps? Then compare direct subsidies for wind farms at £95 per Mega Watt Hour.
The idea that an oil company should go to the far corners of the earth brave hostile natives and their governments drill through miles of ocean and bedrock to pump out crude then transport it back to the UK ,refine it transport it again then deliver it to your tank and not make a good profit doing it after all taxes are paid is just ridiculous. But many Greenies seem to think that any profit at all is blood gored directly from their side and should be stopped. One day they will get their wish and they will starve or freeze to death in the dark.

[Graeme]

You can read more about the "small potatoes" here:

Fossil Fuel Subsidies in the U.S.

What is a fossil fuel subsidy?
A fossil fuel subsidy is any government action that lowers the cost of fossil fuel energy production, raises the price received by energy producers or lowers the price paid by energy consumers. There are a lot of activities under this simple definition—tax breaks and giveaways, but also loans at favorable rates, price controls, purchase requirements and a whole lot of other things.

Are you looking for information about International Fossil Fuel Subsidies? Then go here.

Want to take action to end fossil fuel subsidies? Sign this petition.

How much money does the U.S. government give oil, gas and coal companies?

In the United States, credible estimates of annual fossil fuel subsidies range from $14 billion to $52 billion annually, while even efforts to remove small portions of those subsidies have been defeated in Congress, as shown in the graphic below. Download your own pdf copy here.

As if that wasn’t enough, the reality is that the fossil fuel industry has profound impacts in much bigger ways.

Health. A 2009 report by the National Academy of Sciences claims that burning fossil fuels results in about $120 billion per year in health-related costs.

Infrastructure spending. The US is already committed to spending at least $1.6 trillion additional dollars per year in maintenance, new vehicles and fuel. We built our power transmission lines on the assumption of large, remote power plants. We build our houses and industries on the assumption of cheap electricity; those practices, codes and regulations are still embedded in our construction and manufacturing sectors. We built our power transmission lines on the assumption of large, remote power plants.

Costs from climate change. The costs of accelerating climate change are staggering, and are certainly greater than the costs of ending our dependence on fossil fuels.

Favorable corporate structures. According to new research (July 2013), fossil fuel companies are the main beneficiaries of favorable corporate structures under Master Limited Partnerships that provides them with some $4 billion per year in subsidies and tax avoidance.

Whatever the numbers, it seems ludicrous that any of our tax dollars would support such established and profitable industries. These energy subsidies are completely out of step with a nation that now broadly accepts the need to end our collective oil addiction and fight global warming.

And more here:

Fuelling controversy

It is the growing cost of subsidies, rather than worries about climate change, that explains the renewed interest in cutting them, says Fatih Birol at the International Energy Agency (IEA). They have become unaffordable as global oil prices have more than doubled between 2009 and 2012. In Jordan, for instance, their cost increased more than tenfold in just two years. And in many other countries they now account for more than 5% of GDP.

Globally, the cost of government subsidies for fossil fuels increased from $311 billion in 2009 to $544 billion in 2012, the IEA estimates. Once lost tax revenues are included, this figure rises to around $2 trillion, equal to over 8% of government revenues, according to a recent IMF report.

Other research suggests that most of this spending leads to big “deadweight losses”, meaning lost economic efficiency as a result of government intervention. In the case of fuel subsidies for road transport, worth $110 billion globally in 2012, these losses reached $44 billion, reckons Lucas Davis at the University of California, Berkeley, in a new paper.

Yet it is not only that the economic cost of subsidies is at a new high. The case for cutting them this year is particularly strong. Countries with high fuel subsidies are more exposed to external shocks, as holding down prices causes their budget deficits to explode, making them vulnerable to rising global interest rates. Cutting subsidies now would help them prepare for when borrowing gets harder as quantitative easing ends. It would also leave more money for growth-boosting policies, such as infrastructure investment.

Inequality would be reduced, too. IMF research shows that only 7% of fuel subsidies in poor countries go to the bottom 20% of households; 43% end up in the pockets of the richest 20%. Petrol subsidies are particularly regressive (and polluting, see picture), as richer people are more likely to drive cars. Money saved could be spent on targeted cash-transfer schemes for the poor, as is done in Malaysia.

[vtsnowedin]

You Reeaahlise this ... means ... WAR. !! The friendly debate type of course and starting tomorrow as I have family things to do tonight. Arm yourself and prepare for (verbal) battle.!!

[rockdoc123]

Graeme as usual your posts on everything are thinly disguised rants that everything about oil and gas extraction is bad and everything about renewables is good.

Please put in context here your above rant about oil and gas companies getting tax breaks so that they can provide energy for consumers versus the two tax credits given to the renewable side of things: Production Tax Credit and Investment Tax Credit.

How precisely are these any different than the tax credits given to Oil and Gas other than the fact that the tax credits given to O&G actually have created jobs and badly needed energy whereas the tax credits given to renewables seems to have been pretty unsuccessful? Indeed a few buddies of Obama made out pretty well from the incentives given to alternative energy....and then declared chapter 11 after they had presumably made enough to upgrade their Maui vacation homes.

As I have said numerous times on this site tax breaks and other incentives are absolutely necessary to get companies to invest in the various things we need whether it be oil, gas, wind or nuclear. If you take the tax credits away from the oil and gas industry then you necessarily need to take them away from the alternatives. Absolutely the wrong thing to do. We need incentives for alternatives and we need incentives for oil and gas simply because they are an immediate solution whereas the alternatives are still something that require time and investment prior to being any help whatsoever.

[Graeme]

Oil & Gas — Over 13 Times More in Historical Subsidies than Clean Energy

You know the line — “Renewable energy shouldn’t receive government support. If it can’t stand on its own in the free market, it doesn’t deserve to grow.” The answer — total freakin’ hogwash, horsefeathers, balderdash!

First of all, as you might have gathered from the title, fossil fuel’s historical subsidies are like skyscrapers next to single-family-renewable-energy-subsidy homes. This is, notably, without including the massive indirect subsidies the oil and gas industry receive in unchecked externalities that wreak havoc on our health, our quality of life, and the potential viability of the human species after climate change is done with us.

You can see in this chart below that historical oil and gas subsidies are over 13 times larger than renewable energy (not including biofuels) subsidies:

Over the first 15 years of these energy sources’ subsidies, oil and gas got 5 times what renewables got (in 2010 dollars) and nuclear energy got 10 times as much.

“Nuclear spent an average of about $3.3 billion a year, oil and gas about $1.8 billion, and renewable energy just under half a billion,” DBL Investors Managing Partner Nancy Pfund and Ben Healey recently wrote in “What would Jefferson do?“

You can also look at subsidies as a percentage of the federal budget in this chart:

And oil and gas support hasn’t gone away. In fact, in some ways, it still trumps support for renewables. From Greentech Media:

“The oil and gas industries have Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs), Pfund said, two low-capital-cost ways of financing infrastructure now rapidly expanding in the financial services world. Neither is available to renewables investors, Pfund said, and both cost less than the tax equity funds derived from solar’s Investment Tax Credit (ITC) and wind’s Production Tax Credit (PTC).”

“The U.S. government has also played a huge role in subsidizing natural gas infrastructure and technology,” Pfund added. “The combustion turbine was developed for aircraft and heavily subsidized. It was later reapplied to the gas sector.”

Now, furthermore, there are several reasons renewable energy should be subsidized today. Here are 3 big ones:

Clean energy subsidies actually benefit the economy! “A new study,” Pfund noted, “shows the ITC, when you look at it over the life of the credit, by creating these solar leases, provides a 10-percent return to the federal government. They are actually making money through this incentive through the revenues from all the companies in the solar supply chain.” Cutting the wind energy PTC means cutting 37,000 jobs out of the US economy, jobs that create good tax revenue.

We need clean energy subsidies (stronger than the ones we have today) or an adequate price on pollution to address the fact that pollution from fossil fuels is killing us.

Historical subsidies for fossil fuels, as noted above, dwarf historical subsidies for clean energy. It’s only fair that clean energy get to play on a level playing field, with the same level of support that fossil fuels and nuclear have gotten.

It’s pretty simple, actually. Once you look at the facts.

cleantechnica

[ROCKMAN]

Thank goodness the EU is finally getting rid of those green tax breaks that were killing the planet. LOL.

Reuters - Funding green energy will become harder under EU rules published on Wednesday designed to replace subsidies with market-based schemes, just when the Ukraine crisis has heightened the need for alternatives to imported fossil fuel. The executive European Commission said the guidelines, which will be gradually phased in, strike a necessary balance after fierce political debate about the cost of green subsidies. "Politically, it's the best balance possible. We were obliged to establish a lot of trade-offs," the Commission's competition chief, Joaquin Almunia, told reporters.

The rules take effect from July 1 this year and from 2017 all member states will have to hold tenders to support new green power facilities following a pilot phase from 2015-16. The idea is to replace feed-in tariffs, which have little or no relation to market reality but have spurred renewable development, with auctions or bidding processes open to all green energy generators competing equally for government funds.

The European Union's leading economy, Germany, has the biggest interest in the new rules as it seeks to enact its Energiewende, or shift from nuclear to green fuel. The Commission had been investigating whether Germany helped its industries unfairly by exempting them from green surcharges. This week, the German government reached a compromise deal that leaves Berlin with scope to set special rules for individual sectors.

An early draft last year could have made it possible to subsidise new nuclear power plants without consulting the Commission, provoking fierce criticism. However, the latest guidelines do not include rules on aid for nuclear energy. This means if member states want to fund such projects, they need to notify the Commission, which will assess requests on a case-by-case basis. The omission was a blow to Britain, which wants to use state guarantees to help finance a nuclear plant to be built by France's EDF. The EU executive is investigating whether the plan breaks the bloc's competition rules.

[rockdoc123]

Oil & Gas — Over 13 Times More in Historical Subsidies than Clean Energy

talk about misleading. The only reason there is much more value assigned to tax incentives for oil and gas is because it is a big business, a going concern and has been for many decades. As a consequence they would use the tax breaks much more than say a small start up company producing solar panels that has been in business for a couple of years.

The oil and gas industries have Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs), Pfund said, two low-capital-cost ways of financing infrastructure now rapidly expanding in the financial services world. Neither is available to renewables investors

again misleading. There is no rule that states a company that for arguments sake makes solar panels cannot be registered as a MLP or a REIT. The rules are very plain. The only reason why renewable companies do not do this is it requires them to be making enough money that they can comfortably distribute profits regularly back to shareholders (monthly in the case of REITs and quarterly in the case of MLP). Both are popular in oil and gas in situations where the cashflow is predictable.

[Outcast_Searcher]

But many Greenies seem to think that any profit at all is blood gored directly from their side and should be stopped. One day they will get their wish and they will starve or freeze to death in the dark.

It's not just "Greenies", it's the anti-business left wing redistributionists in general, at least in the U.S.

Right you are, of course. While they await the consequences of freezing in the dark (as forecast by Ayn Rand in "Atlas Shrugged"), they shriek about the lack of "good" jobs, even as they seek endless taxes and regulations to make companies more likely to:

1). Outsource jobs to cheaper, more tax friendly locations.
2). Invest in more automation (which is productive, and doesn't try to shut down the hand that feeds them).

Oh, I forgot. It's all Ronald Reagan's fault.

[Quinny]

So gifts to corporates are good, but good jobs with decent wages are bad?

[Graeme]

rd, You response is misleading. The reason renewable subsidies are lower is because the o/g industry has suppressed them for many years. But, at long last, that is starting to change.

Fossil Fuel Subsidies Dampen Shift Towards Renewables

Despite evolving public awareness and alarm over climate change, subsidies for the production and consumption of fossil fuels remain a stubborn impediment to shifting the world’s energy matrix towards renewable sources.

Collectively, fossil fuel subsidies amount to a nearly two-trillion-dollar oar left dragging in the water.

Today, lawmakers hold routine hearings on climate change’s costs and mitigation, citizens in developing nations demand reparations for extreme weather, and even multinational corporations have tepidly begun advertising that rising seas could spill over onto their bottom lines.

But talk is one thing, money quite another.

“If you can remove fossil fuel subsidies, then renewables are the clear choice, they are far cheaper in the long run,” said Philipp Tagwerker, research fellow at the Worldwatch Institute and author of a recent report tallying subsidies. “Renewables are competitive at the moment, but it takes political will to change.”

After the 2008 financial crisis, subsidies fell along with plummeting energy prices, but by 2011 they had rebounded to pre-crisis levels. That volatility, whether due to supply and demand or geopolitics and speculation, is partly why countries are looking to lessen their exposure to carbon-based fuels.

Though definitions vary, in 2013 the IMF found that when “post-tax” externalities like carbon emissions, effects on health and resource scarcity were considered, global subsidies of fossil fuels rose to “$1.9 trillion worldwide – the equivalent of 2.5 percent of global GDP, or 8 percent of government revenues.” Estimates for renewable subsidies top out at a comparably measly 88 billion dollars globally.

“That’s a pretty hard equation to overcome,” said Dr. Daniel M. Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley. “Fossil fuels not only have the advantage of subsidies, but they are the incumbent.

“That said we are seeing much faster growth in the renewable sector,” Kammen told IPS. “The economic story around renewables has shifted. It’s not just wind – solar is competitive now, and we are seeing big pushes for geothermal.”

Though critics of renewables often cite their higher cost per kilowatt-hour (kWh) compared to traditional sources, when externalities are considered, that dynamic is reversed. According to the Worldwatch report, customary analyses find it can take up to 15 cents of a renewable subsidy to generate one kWh, far higher than the 0.1 to 0.7 cents per kWh for fossil fuels. But including externalities immediately tacks on an additional 23.8 cents per kwh to fossil fuels but only half a cent to renewables.

Tagwerker writes that “accelerating the phaseout of fossil fuel subsidies would reduce CO2 emissions by 360 million tons in 2020, which is 12 percent of the emission savings that are needed in order to keep the increase in global temperature to 2 degrees Celsius.”

ipsnews

[rockdoc123]

rd, You response is misleading. The reason renewable subsidies are lower is because the o/g industry has suppressed them for many years

my post wasn't misleading at all....do the math and show I was wrong. All you've done here is raise a strawman argument.

And having worked in the oil industry for more than thirty years in all that time (and some of it was at senior exec level) I don't ever remember having the conversation with senior people about having to "suppress the alternative industry". There never was a need to, they were always their own worst enemy. In fact over the years the O&G industry embraced alternatives more than the public did....wind turbines are commonly used for power in offshore platforms as an example, solar panels are often used to power SKADA systems and other telecommunications in the field.

[Graeme]

Bollocks. Read this thread.