At a time when we need to transition away from fossil fuels as quickly as possible, the US federal and state governments are giving the industry tens of billions of dollars to make the production of their dirty, dangerous products more profitable.
A report from Oil Change International (OCI) investigated American energy industry subsidies and found that in 2015–2016, the federal government provided $14.7bn per year to the oil, gas, and coal industries, on top of $5.8bn of state-level incentives (globally, the figure is around $500bn). And the report only accounted for production subsidies, excluding consumption subsidies (support to consumers to lower the cost of fossil fuel use – another $14.5bn annually) as well as the costs of carbon and other fossil fuel pollutants.
The OCI report noted that if we want to meet the Paris target of limiting global warming to less than 2°C, not only does the fossil fuel industry have to stop developing new reserves, but “some already-tapped reserves must be retired early.” This reality is incompatible with continued US government subsidization of fossil fuel industry production, including $2.5bn per year for the exploration of new fossil fuel resources – new resources that simply cannot be developed if we’re to meet the Paris climate target. The OCI notes that permanent tax breaks to the US fossil fuel industry are more than seven times larger than those for renewable energy. And they’re making it profitable for the oil industry to extract resources that would otherwise be left in the ground. At current prices, the production of nearly half of all U.S. oil is not economically viable, except with federal and state subsidies. US federal policy is also propping up the coal industry. Were they forced to meet modern pollution standards, 98% of currently operating coal power plants would be unprofitable compared to an equivalent natural gas plant. Coal power plants only stay open through regulations allowing pollution exemptions, and by forcing taxpayers to pick up the climate change bill.