Guest slam dunk by David Middleton

From the ever unreliable Nick Cunningham at Oil Price Dot Com…

Global Fossil Fuel Subsidies Hit $5.2 Trillion
By Nick Cunningham – May 12, 2019

The world spent a staggering $4.7 trillion and $5.2 trillion on fossil fuel subsidies in 2015 and 2017, respectively, according to a new report from the International Monetary Fund. That means that in 2017 the world spent a whopping 6.5 percent of global GDP just to subsidize the consumption of fossil fuels.

China was “by far, the largest subsidizer” in 2015 at $1.4 trillion, the IMF said. The U.S. came in second at $649 billion. In other words, the U.S. spent more on fossil fuel subsidies in 2015 than it did on the bloated Pentagon budget ($599 billion in 2015). Russia spent $551 billion, the EU spent $289 billion, and India spent $209 billion. Emerging markets in Asia accounted for 40 percent of the total while the industrialized world accounted for 27 percent, with smaller percentages found in other regions.

The subsidy figure the IMF uses incorporates a variety of supports for fossil fuels, including not pricing for local air pollution, climate change and environmental costs, as well as undercharging for consumption taxes and undercharging for supply costs.

By fuel, coal is receives the most largesse, account for 44 percent of the global total. Oil was shortly behind at 41 percent, and natural gas and electricity output received 10 percent and 4 percent, respectively.
There is a long list of reasons why slashing fossil fuel subsidies is not only a good idea, but very much needed. The climate crisis is worsening.

[…]

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

Oil Price Dot Com

What do I mean by “fake subsidies”?

The subsidy figure the IMF uses incorporates a variety of supports for fossil fuels, including not pricing for local air pollution, climate change and environmental costs, as well as undercharging for consumption taxes and undercharging for supply costs.

All fake subsidies.

More fakery…

The climate crisis is worsening.

And the pièce de résistance of fakery…

The U.S. came in second at $649 billion. In other words, the U.S. spent more on fossil fuel subsidies in 2015 than it did on the bloated Pentagon budget ($599 billion in 2015).

The U.S. actually spent $599 billion on national defense… One of the few things the Constitution authorizes Congress to spend money on. Almost all of fossil fuel “subsidies” consist of the tax treatment of expenses.

The U.S. government spent next to nothing on fossil fuel subsidies in FY2016.

The expenses involved in extracting a depleting resource have to be written off as the resource is produced (depletion allowance). Some capital expenditures are allowed to be written off as expenses, rather than capitalized over time. When we drill wells, tangible drilling expenditures (items with salvage value) have to be capitalized. Intangible drilling expenditures (services and materials with no salvage value) can written off as expenses. According to the most recent EIA analysis of energy subsidies, fossil fuels received almost no net subsidies…

The FY2016 numbers actually reflect a negative subsidy for natural gas and petroleum liquids. They also indicate that the solar subsidy has “fallen” to $4.19/mmBtu. The subsidy for solar power is about 1/3 higher than the wellhead price for natural gas.