Subsidizing Earth's Demise: US Taxpayers Forced to Prop Up Dirty Energy Industry

In the midst of a hurricane season that shows just how expensive inaction on climate change can be, two new reports highlight how massive taxpayer-funded subsidies for fossil fuel companies are propping up an industry that refuses to take responsibility for the destructive and costly chaos it has played an enormous role in creating.

“Every dollar spent subsidizing this industry takes us further away from achieving internationally agreed emissions goals, and maintaining a stable climate.”
—Oil Change InternationalA recent analysis found that damage from extreme weather intensified by climate change and the health impacts from using gas, oil, and coal have cost the U.S. economy an annual average of $240 billion in the past decade. Between now and 2028, that figure is expected to rise to $360 billion annually—more than half of the economy’s growth—and that doesn’t even account for the cost of industry subsidies.

On top of the financial burden from burning fossil fuels, a report (pdf) published Tuesday by Oil Change International (OCI) found that industry subsidies cost U.S. taxpayers more than $20 billion each year, $14.7 billion at the federal level and $5.8 billion at the state level. These subsidies take several forms—including financial handouts, flexible liability policies, and tax breaks—and, researchers argue, “waste billions of dollars propping up an industry incompatible with safe climate limits.”

A separate study by Stockholm Environment Institute (SEI), published Monday in the journal Nature, examined the impact of subsidies on U.S. crude oil production, and concluded that subsidies to oil companies encourage them to drill oil fields that would otherwise be unprofitable.

Over the next few decades, SEI researchers estimate, “tax preferences and other subsidies push nearly half of new, yet-to-be-developed oil investments into profitability, potentially increasing U.S. oil production by 17 billion barrels” that, once burned, will release about 6 billion tonnes of carbon dioxide, or CO2, into the atmosphere.

“This is oil we don’t need and it takes the U.S. further away from its climate goals of reducing CO2 emissions,” report co-author Peter Erickson, a senior scientist at SEI’s U.S. center, told Motherboard. The U.S. currently ranks second, behind only China, in global CO2 emissions.