Weekend: Welfare Queens

Written By Nick Hodge

Posted February 20, 2011

Welcome to the Energy and Capital Weekend Edition — our insights from the week in investing and links to our most-read Energy and Capital and sister publication articles.

You want deficits cut?

Then you’re a supporter of renewable energy — and you’re not alone.

In a recent Gotham Research poll, 73% of Americans (that extrapolates to 226 million people) said they want half or all fossil fuel subsidies repurposed to support solar and other renewables.

Some of you will dismiss that result. Some of you will deny it. Some of you will say it’s a lie.

To each his own.

But here are some things you can’t argue with*:

  1. The International Energy Agency’s (IEA) chief economist has said phasing out billions of dollars of fossil fuel subsidies “would trigger vast savings in energy consumption… and change the energy game quickly and substantially.” He added that fossil fuel subsidies are “the appendicitis of the global energy system which need to be removed for a healthy, sustainable development future.”

  2. The IEA calculated that in 2008, 37 large developing countries spent about $557 billion in energy subsidies.

  3. An Environmental Law Institute study estimated $72 billion in tax breaks to U.S. fossil fuel companies from 2002-2008.

  4. An Organization for Economic Cooperation and Development (OECD) study found direct subsidies that artificially lower the cost of fossil fuels amounted to $312 billion globally in 2009.

And yet, when a co-author of the U.S. Energy Information Administration’s World Energy Outlook was recently asked “if someone has actually done a credible, comprehensive, definitive count of how much taxpayers underwrite fossil fuels in this country”, he said there is no such widely accepted count or number available…

I guess it is pretty hard to count up all the:

  • tax breaks

  • subsidies

  • the costs of government agencies that are set up to perform functions that these industries should pay full cost for doing — like figuring out how to stuff their pollution underground instead of wasting it on exorbitant, fantasy projects like “FutureGen”

  • military expenditures to protect oil shipping lanes

  • pollution forgiveness or remediation

  • rock-bottom-price access to public property, such as mountains, subsurface property, aquifers, and ocean waters — all of which fossil energy companies routinely wreck and pay comparatively little to fix

If we want a discussion about wasteful spending, I think this is a pretty good place to start.

Just throwing it out there.

Call it like you see it,

Nick Hodge

Editor, Energy and Capital

(*Thanks to a Greentech Media guest post for the information in these lists.)

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