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An oil rig in North Dakota. (Photo: Tim Whitlow/cc/flickr)

An oil rig in North Dakota. (Photo: Tim Whitlow/cc/flickr)

US Spending Billions to 'Dig Ourselves a Bigger Climate Hole'

New report highlights continued fossil fuel subsidies that foster further climate crisis at taxpayers' expense

Andrea Germanos

Levels of carbon dioxide in the atmosphere have reached levels not seen before in human history, and climate scientists have warned that the world is on track to exceed the warming threshold of 2 degrees Celsuis.

But despite his statement that "we have a moral obligation" to act on climate change, President Barack Obama has embraced an "All of the Above" energy strategy that still clings to and in fact incentivizes fossil fuels.

A new report (pdf) from research and advocacy organization Oil Change International reveals that the United States is pouring $21.6 billion into subsidies for fossil fuel exploration and production each year.

"While scientists implore world leaders to leave fossil fuels in the ground to avoid a climate catastrophe, our analysis has found that billions upon billions of U.S. taxpayer dollars are going to digging ourselves a bigger climate hole every year," stated David Turnbull, Campaigns Director of Oil Change International. "Rather than putting down the shovel, our government is using even more taxpayer dollars to buy a backhoe."

The report states that since Obama took office in 2009, these subsides have increased 45 percent.

Obama has, however, included in all his budget proposals provisions to remove some of the federal fossil fuel subsidies. The report states that those left out "$12.4 billion in annual federal subsidies that directly and indirectly benefit the fossil fuel industry." Yet even those meager efforts have failed to pass Congress—perhaps an unsurprising outcome in the face of the hundreds of millions of dollars the fossil fuel industry has spent on lobbying efforts and campaign finance contributions.

From the report:

[F]or every $1 that fossil fuel companies spent on lobbying and campaign finance contributions to Congress, it got over $100 back in subsidies – that’s a more than 10,000 percent return on investment.

Among the "worst of the worst" subsidies the report states are "two major U.S. subsidies aimed directly at encouraging exploration [that] totaled $136 million in 2013 alone." These were tax deduction allowances so that coal companies could deduct their exploration costs and oil and gas companies could deduct seismic survey and exploratory drilling costs from income tax payments.

Other fossil fuel enabling polices the report notes include allowing companies to deduct costs of oil spill clean-up from tax payments as a "standard business expense"—a practice that added up to $679 million in 2013, and allowing tar sands producers to be exempt from the Oil Spill Liability Trust Fund, which allows them to avoid the 8 cents per barrel tax into the Fund.  This added up to 44 million, the report found.

Adding another $10.5 to $500 billion each year is the military spending in order for the U.S. to "defend overseas oil interests." Additionally, the report finds that U.S. taxpayers are stuck with the fossil fuel industry's bill for environmental and public health costs like air and land pollution, which adds up to as much as $302 billion per year.

"The science is clear that at least two-thirds of proven fossil fuel reserves need to stay in the ground to avoid catastrophic climate impacts," stated report author Shakuntala Makhijani. "It is time for the U.S. government to show leadership and immediately end the massive subsidies that encourage their production."


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