The Dernogalizer

September 19, 2009

US Tax Breaks Subsidize Foreign Oil Production

Filed under: Energy/Climate — Matt Dernoga @ 1:52 am
Tags: ,

The Environmental Law Institute has kindly issued a report all the US energy subsidies from 2002-2008, and compared those for fossil fuels to those for renewable energy.  The tax breaks we give for foreign oil production is the biggest standout.

U.S. Tax Breaks Subsidize Foreign Oil Production

(Washington, DC) — The largest U.S subsidies to fossil fuels are attributed to tax breaks that aid foreign oil production, according to research to be released on Friday by the Environmental Law Institute in partnership with the Woodrow Wilson International Center for Scholars. The study, which reviewed fossil fuel and energy subsidies for Fiscal Years 2002-2008, reveals that the lion’s share of energy subsidies supported energy sources that emit high levels of greenhouse gases.

The research demonstrates that the federal government provided substantially larger subsidies to fossil fuels than to renewables. Fossil fuels benefited from approximately $72 billion over the seven-year period, while subsidies for renewable fuels totaled only $29 billion. More than half the subsidies for renewables—$16.8 billion—are attributable to corn-based ethanol, the climate effects of which are hotly disputed. Of the fossil fuel subsidies, $70.2 billion went to traditional sources—such as coal and oil—and $2.3 billion went to carbon capture and storage, which is designed to reduce greenhouse gas emissions from coal-fired power plants. Thus, energy subsidies highly favored energy sources that emit high levels of greenhouse gases over sources that would decrease our climate footprint.

The U.S. energy market is shaped by a number of national and state policies that encourage the use of traditional energy sources. These policies range from royalty relief to the provision of tax incentives, direct payments, and other forms of support to the non-renewable energy industry. “The combination of subsidies—or ‘perverse incentives’— to develop fossil fuel energy sources, and a lack of sufficient incentives to develop renewable energy and promote energy efficiency, distorts energy policy in ways that have helped cause, and continue to exacerbate, our climate change problem,” notes ELI Senior Attorney John Pendergrass. “With climate change and energy legislation pending on Capitol Hill, our research suggests that more attention needs to be given to the existing perverse incentives for ‘dirty’ fuels in the U.S. Tax Code.”

The subsidies examined fall roughly into two categories: (1) foregone revenues (changes to the tax code to reduce the tax liabilities of particular entities), mostly in the form of tax breaks, and including reported lost government take from offshore leasing of oil and gas fields; and (2) direct spending, in the form of expenditures on research and development and other programs. Subsidies attributed to the Foreign Tax Credit totaled $15.3 billion, with those for the next-largest fossil fuel subsidy, the Credit for Production of Nonconventional Fuels, totaling $14.1 billion. The Foreign Tax Credit applies to the overseas production of oil through an obscure provision of the U.S. Tax Code, which allows energy companies to claim a tax credit for payments that would normally receive less-beneficial treatment under the tax code.

ELI researchers applied the conventional definitions of fossil fuels and renewable energy. Fossil fuels include petroleum and its byproducts, natural gas, and coal products, while renewable fuels include wind, solar, biofuels and biomass, hydropower, and geothermal energy production. A graphic chart (soon to be released) that will be released on Friday presents general conclusions about the overall subsidies for fossil fuels versus renewables other than corn-derived ethanol. Nuclear energy, which also falls outside the operating definition of fossil and renewable fuels, was not included.

The Environmental Law Institute® is an independent, non-profit research and educational organization based in Washington, DC. The Institute serves the environmental profession in business, government, the private bar, public interest organizations, academia, and the press. For further information from the Environmental Law Institute, please contact Brett Kitchen at 202-939-3833 or pressrequest@eli.org.
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May 28, 2009

Exxon Wrong

Filed under: Energy/Climate — Matt Dernoga @ 4:51 pm
Tags: , ,

Exxon’s CEO Rex Tillerson said today that oil will be the dominant fuel for a century.  What is it with these silly oil companies?  In case you want to know why Exxon is a pathetic company, this website exposes them well.  You didn’t really believe them and their commercials where they glowingly talk about cutting global warming pollution and conservation, and the need to protect the environment, did you?  I wonder how many people buy that PR, otherwards known as BS.  Even adding to the hilarity is one of the comments by Tillerson, where is says.. “lawmakers are hurrying to restrict greenhouse gases when many scientific questions surrounding the global warming issue remain unresolved.”  That’s what should be on their rosy commercials.  

A couple months ago, I took Shell to task over their decision to eliminate investment into renewables besides biodiesel.  I think what I said to them is what I could say to Exxon, seeing as how Exxon invests squat as well.  I’m going to take part of that post and paste it here.

“But even if you’re only thinking of your bottom line, how do you come to this conclusion that not only will we not invest much money in renewables, but we won’t invest ANYTHING.  I can see how this would’ve been a good move in 2000 when we had oilmen coming into the Whitehouse.  There were lots of calls for increased drilling, removal of environmental protections, and no action on climate change.  At this point, putting all the eggs in the oil basket might make sense.  But let’s look at what the state of things are now with the next 8 years in mind, as opposed to the last 8 years.

We’ve got an anti-drilling Democratically controlled Congress and Whitehouse.  Environmental regulations are going to be popping up all over the place.  If you look at the stimulus, the overwhelming majority of the money relating to energy was clean energy.  There was also a record amount of money invested in mass transit.  Whatever tax breaks the oil companies got during the last 8 years are likely going to be removed.  There are now new and far reaching tax breaks at the Federal level for solar, wind, geothermal, biodiesel, and plug-in hybrid-electric cars.  These kinds of credits are also showing up all over the states.  My own state of Maryland has a 10k credit for solar, similar incentives for other alternatives, and my county Prince Georges County has a 5,000 dollar property tax credit.  General Motors and Toyota are coming out with plug-in hybrids within the next few years.  Other auto companies are taking a stronger look at it them, and are introducing more hybrids.  Oh, and the US and other countries around the world either have passed or are about to pass climate change cap and trade policy that will inevitably drive up the price of gas and decrease consumption.

I could go on.  Hopefully you get the point.  What are you thinking Shell?  The problem I see with this when you’re purely looking at a bottom line is that the trends are moving in the opposite direction of Shell’s actions.  It’s not smart investment to put none of  the $$$ into renewables when you consider the trends I listed above.  I predict that Shell is going to find itself at a big competitive disadvantage a few years from now when they suddenly realize they “want in” on this clean energy economy, but other companies beat them to the investment, research, start-up and have achieved greater economies of scale and efficiency.  At this point, entry into the clean energy market will hurt Shell, and they will look back on their decision in 2009 to cease renewable energy investment as poor planning.”

Your time is running out, and you’re off by a good 90 years Rex.

March 18, 2009

Palin’s Pipedream

Filed under: energy — Matt Dernoga @ 3:56 pm
Tags: , ,

I want to preface this post by saying that I’m not taking a position one way or the other whether having a 4o billion dollar natural gas pipeline in Alaska is a good idea.  I would rather us take that 40 billion and invest it in renewables, but that’s an argument for another day.  However, I read a fascinating article today about how unlikely it is that such a pipeline is ever going to happen.  Additionally incredible is that the article lays the blame very convincingly at the feet of Sarah Palin, even though she can’t stop talking about how she’s building a natural gas pipeline.  Turns out that was a lie.  I’d also like to note that the writer of this article is clearly biased against Sarah Palin, and makes that very clear all throughout the article.  I’m also biased against her, which is why I find this latest debacle hilarious.  However, when the writer is laying out the facts, they are pretty damning.  It’s pretty long, 5 pages, but I highly suggest you read the whole thing and judge yourself.  ARTICLE

Excerpts….

“Forget “Drill, baby, drill.” Sarah Palin says she’s building a $40 billion gas pipeline, which even President Obama wants. The only problem: It isn’t there. And it’s her fault.”

“To many outside of Alaska, it may therefore come as a surprise to learn that not only does such a pipeline not exist, but—even as Alaska’s deep winter darkness gives way to the first light of spring—the prospect that it will be built within Sarah Palin’s lifetime grows dimmer by the day.

“To many outside of Alaska, it may therefore come as a surprise to learn that not only does such a pipeline not exist, but—even as Alaska’s deep winter darkness gives way to the first light of spring—the prospect that it will be built within Sarah Palin’s lifetime grows dimmer by the day.”

“As Mike Hawker, the Republican co-chairman of Alaska’s House Finance Committee, told me one night in Juneau not long ago, “The only thing standing in the way of an Alaska gas pipeline is the Sarah Palin administration.””

“How better to defang the industry that had ruled Alaska like a colonial master for 40 years than to make sure its major players would be no more than spectators at the state’s next grand pageant, the building of a new pipeline that would carry natural gas from Alaska’s North Slope to what Palin called the “hungry markets” of the Lower 48?

In her zeal, however, Palin overlooked one salient fact: It was Alaska’s three largest oil producers—Exxon Mobil Corp., BP, and ConocoPhillips Co.—that controlled the natural gas the new pipeline would need if it were ever to pump anything more than hot air.

By writing the rules in a way that excluded the oil companies from the process, Palin—although she gained the short-term approval-rating points that made her seem attractive to McCain last summer—all but assured that the “largest private-sector infrastructure project in North America” would never be anything more than her personal field of dreams.”

I hope she runs for President in 2012, it would all but ensure another 4 years for Obama.

March 17, 2009

Shell-Shocked

Filed under: energy — Matt Dernoga @ 11:10 pm
Tags: , , , ,

It’s a shame that after a couple of posts involving businesses making the right decisions in the renewable energy market and taking action on climate change, I end up having to break the news that Shell has eliminated all investment in renewables besides biodiesel.  It’s not as though Shell was doing very much anyways, they have invested 1.7 billion dollars over the past 5 years in renewables.  In comparison, they spend 32 billion total on investments in 2008 alone.  Still, this is a sign that Shell is moving in the opposite direction of a lot of businesses and corporations.  While we’re seeing an increase in renewable energy output and investment amongst companies, Shell is taking theirs away.

Obviously I’m not one of the “experts” in Shell making these kinds of multi-billion dollar decisions, but I have to wonder what is going through their minds.  Let’s assume the obvious, which is that Shell has no moral conscience at all when it comes to climate change or environmental protection.  Their bottom line is more important than the public good.  I got it, they’re a business.  Unfortunately expecting a moral conscience of some corporations is expecting too much.

But even if you’re only thinking of your bottom line, how do you come to this conclusion that not only will we not invest much money in renewables, but we won’t invest ANYTHING.  I can see how this would’ve been a good move in 2000 when we had oilmen coming into the Whitehouse.  There were lots of calls for increased drilling, removal of environmental protections, and no action on climate change.  At this point, putting all the eggs in the oil basket might make sense.  But let’s look at what the state of things are now with the next 8 years in mind, as opposed to the last 8 years.

We’ve got an anti-drilling Democratically controlled Congress and Whitehouse.  Environmental regulations are going to be popping up all over the place.  If you look at the stimulus, the overwhelming majority of the money relating to energy was clean energy.  There was also a record amount of money invested in mass transit.  Whatever tax breaks the oil companies got during the last 8 years are likely going to be removed.  There are now new and far reaching tax breaks at the Federal level for solar, wind, geothermal, biodiesel, and plug-in hybrid-electric cars.  These kinds of credits are also showing up all over the states.  My own state of Maryland has a 10k credit for solar, similar incentives for other alternatives, and my county Prince Georges County has a 5,000 dollar property tax credit.  General Motors and Toyota are coming out with plug-in hybrids within the next few years.  Other auto companies are taking a stronger look at it them, and are introducing more hybrids.  Oh, and the US and other countries around the world either have passed or are about to pass climate change cap and trade policy that will inevitably drive up the price of gas and decrease consumption.

I could go on.  Hopefully you get the point.  What are you thinking Shell?  The problem I see with this when you’re purely looking at a bottom line is that the trends are moving in the opposite direction of Shell’s actions.  It’s not smart investment to put none of  the $$$ into renewables when you consider the trends I listed above.  I predict that Shell is going to find itself at a big competitive disadvantage a few years from now when they suddenly realize they “want in” on this clean energy economy, but other companies beat them to the investment, research, and start-up and have achieved greater economies of scale and efficiency.  At this point, entry into the clean energy market will hurt Shell, and they will look back on their decision in 2009 to cease renewable energy investment as poor planning.

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