…and tries to explain climate denial to Rocket Scientists…
Dr. Martin Hoffert, Professor Emeritus, NYU
…and tries to explain climate denial to Rocket Scientists…
Dr. Martin Hoffert, Professor Emeritus, NYU
THE GLOBAL SUBSIDIES INITIATIVE | UNTOLD BILLIONS:
FOSSIL-FUEL SUBSIDIES, THEIR IMPACTS AND THE PATH TO REFORM
The IEA study estimated that the removal of consumer subsidies in eight non-OECD countries would increase
annual GDP on average in those countries by 0.73 per cent. Individual country results ranged from an increase in GDP by 2.22 per cent in Iran to 0.10 per cent in South Africa.
The IEA study suggested that the removal of subsidies in eight non-OECD countries would lower their CO2 emissions by 16 per cent due to a decrease in energy use by 13 per cent. Globally this would amount to a decrease of CO2 emissions of 4.6 per cent.
A 2004 study by leading American scientists found that by the year 2050 we will need at least three times the current primary energy and it will have to be three times as clean to avoid destroying the climate. It concludes that there are no earthly technologies capable of providing that power.
One of the leading scientists, Dr. Martin Hoffert, has called for an emergency crash program to replace fossil fuel; an effort similar to the Manhattan Project, which created the nuclear industry (and bombs) in three years, and the Marshall Plan which rebuilt Europe. This Earth Energy Project would cost $30 Billion a year.
Where could that come from?
Fossil fuel provides 81% of primary power. Over the two years 2010 and 2011, ExxonMobil reported $9,910 million in pretax U.S. profits. But it enjoyed so many tax subsidies that its federal income tax bill was only $39 million — a tax rate of only 0.4 percent.
US Fossil fuel companies reported $271 billion in profits in 2012. Why are we giving tax breaks to the very industries that are costing us hundreds of billions in damages and destroying the climate of the planet?
The Revenue Act of 1913 allowed oil companies to write off 5 percent of the costs from oil and gas wells. A century later, oil companies can now deduct three times this rate. At 15 percent the depletion subsidy increases when prices are high, when oil companies enjoy greater profit. It can even eliminate all federal taxes for independent producers.
A Center for American Progress report estimated that closing this tax break would save $11.2 billion over 10 years. President Obama has called on Congress to eliminate the percentage depletion allowance, along with a series of other tax breaks totaling $4 billion annually. Even Ronald Reagan once asked for the same in a 1985 speech on tax reform:
“Under our new tax proposal the oil and gas industry will be asked to pick up a larger share of the national tax burden. By eliminating this special preference, we’ll go a long way toward ensuring that those that earn their wealth in the oil industry will be subject to the same taxes as the rest of us.”
“Oil companies get to use a special method for calculating their deductions called “percentage depletion.” Instead of deducting the costs of an oil or gas well as its value declines, oil companies are allowed to deduct a flat percentage of the income they derive from it. Because the deductions are based on revenues, not costs, the subsidy actually increases at times when prices are high, when oil companies enjoy their greatest profits. American consumers have been waiting for the benefits of these tax subsidies to trickle down in lower gas prices. It hasn’t happened. In fact, these subsidies existed during the 2008 oil shock when prices hit a record $147 per barrel, yet did nothing to lower oil prices or increase production. And repealing them won’t increase prices at the pump. “Gasoline prices are a function of world oil prices and refining margins,” explains Severin Borenstein, co-director of UC-Berkeley’s Center for the Study of Energy Markets. Any incremental impact on production “will have no impact on world oil prices, and therefore no impact on gasoline prices.”
Oil tax subsidies are simply a waste of taxpayer dollars. Oil and gas companies make investment decisions based on the profit potential. Those decisions are driven primarily by market conditions, including the price of oil on world markets, not marginal tax incentives. “With $55 oil we don’t need incentives to the oil and gas companies to explore,” said President George W. Bush in 2005.
“There are plenty of incentives.” According to research by GigaOm analyst Adam Lesser, in a 2011 report from the International Energy Agency fossil fuels currently receive subsidies via “at least 250 mechanisms.”
In 2010, the U.S. Energy Information Administration (EIA) said $557 billion was spent to subsidize fossil fuels globally in 2008, compared to $43 billion in support of renewable energy.
The study U.S. Government Subsidies for Energy Sources 2002-2008 calculated lost government revenues by each fossil fuel sector: The vast majority of federal subsidies for fossil fuels and renewable energy supported energy sources that emit high levels of greenhouse gases when used as fuel. The federal government provided substantially larger subsidies to fossil fuels than to renewables. Subsidies to fossil fuels—a mature, developed industry that has enjoyed government support for many years—totaled approximately $72 billion over the study period, representing a direct cost to taxpayers.”
We subsidize $18-21 billion a year in the U.S. alone. The US share of world GNP is approximately 27%. The European Union’s “Total energy subsidies in 2011 amount to €26 billion for fossil fuels (+ €40 billion for related health costs), €35 billion for nuclear power, and €30 billion for renewables. Out of a total of €131 billion, renewables which are still in need of support to enter the market get a 23% share – whilst mature, unsustainable and old-fashioned energies get a huge 77% slice of the energy subsidy cake. Equal to $137 billion, US.
A report from the National Research Council estimates “hidden” costs of energy production and use — such as the damage air pollution imposes on human health — that are not reflected in market prices of coal, oil, other energy sources, or the electricity and gasoline produced from them. The damages the committee was able to quantify were an estimated $120 billion in the U.S. in 2005, a number that reflects primarily health damages from air pollution associated with electricity generation and motor vehicle transportation. The figure does not include damages from climate change, harm to ecosystems, effects of some air pollutants such as mercury, and risks to national security, which the report examines but does not monetize.
One technology capable of replacing fossil fuel is Space Solar Power: collecting the constant flux of energy from the sun, and beaming it down to earth, on time, on target, without need for storage or transmission lines. Pure, clean power beamed directly where needed, a constant source of energy and wealth.
The US could fund nearly two thirds of Dr. Hoffert’s estimate by merely eliminating tax breaks for atmo-polluters and directing that revenue to fund new jobs in high-tech aerospace and energy manufacturing. Additional jobs would be created in transitioning the transportation industry from fossil to clean electric propulsion. More jobs could be created in reforesting the earth to capture carbon and repair the damage.
With the addition of the EU de-funding the yearly amount for a Manhattan Project type crash course in renewable energy would be one and a half times as much as Hoffert’s estimate.
The world spends over half a trillion dollars giving tax breaks and subsidies to the richest companies and individuals in the world. They spend that money lobbying and propagandizing to deny they are polluting and changing the climate of the planet.
The problem is, it’s profitable to destroy the climate. Once it’s more profitable to produce clean energy, things will change…
For the Fiscal Year 2006 Kentucky provided a net subsidy of nearly $115 million to the coal industry.
And the coal industry kicked back $2 Million to Mitch McConnell.
The Climate Cost Is Unknown.
Coal is responsible for an estimated $528 million in state revenues and $643 million in state expenditures. The $528 million in revenues includes $224 million from the coal severance tax and revenues from the corporate income, individual income, sales, property and transportation taxes and permit fees. The $643 million in expenditures includes $239 million for the coal haul road system, regulation of the environmental and health and safety impacts of coal, support for worker training, research and development for the coal industry (?), promotion of education about coal in the public schools (propaganda) and support of residents employed by coal. Total costs include $85 million to subsidize the mining and burning of coal.
The industry actually costs more than it brings to the state.
The coal industry generated revenues of $303 million while spending to support coal industry totals more than $270 million and off-budget tax expenditures add $85 million for a total of more than $355 million. The net direct impact of the industry on the state budget is an estimated (minus) –$52 million.
Coal employment accounts for only one percent of Kentucky employment. Direct employment in coal totals $83 million while coal workers’ share of state expenditures totals $73 million. The net impact of direct employment is $10 million. But revenues generated in supply industries total $142 million. Spending to support those workers totals $214 million. The net impact of indirect employment on the Kentucky state budget is –$73 million.
These figures do not include the many externalized costs imposed by coal including healthcare, lost productivity resulting from injury and health impacts, water treatment from siltation caused by surface mining, water infrastructure to replace damaged wells, limited development potential due to poor air quality, and social spending associated with declines in coal employment and related economic hardships of coalfield communities. Some of these externalities impose additional costs to the state. Others are borne by communities that mine and burn coal and by those outside the region.
Official sources project a significant decline in production as easy-to-mine coal is depleted with additional challenges as aging coal-fired power plants are retired and new laws on carbon emissions raise the price of coal relative to cleaner alternatives. Industry representatives and supporters embrace Carbon Capture and Sequestration, but these technologies face high costs, significant risk and uncertainty, are already utilizing large public subsidies, and there is no indication that they work.
Tax expenditures for the coal industry are a set of growing but largely hidden subsidies. Kentucky should examine its rate of taxation and use of subsidies and think strategically about the needs of the Commonwealth and the best path to a prosperous future.”
Oh, yeah, Mitch McConnell is bribed $2,020,466 per year.
Rand Paul is only bribed $234,755 per year
“Runaway growth in the emission of greenhouse gases is swamping all political efforts to deal with the problem, raising the risk of “severe, pervasive and irreversible impacts” over the coming decades, according to a draft of a major new United Nations report.
The Intergovernmental Panel on Climate Change, a body of scientists and other experts appointed by the United Nations that periodically reviews and summarizes climate research, found that companies and governments had identified reserves of these fuels at least four times larger than could safely be burned if global warming is to be kept to a tolerable level.
Put into terms that even capitalists can understand, the valuation of (fossil fuel) companies and petro nations are based largely on their perceived (reported) oil, gas and coal reserves. If 3/4’s of these reserves cannot be used. The valuation of these companies and nations is actually 1/4 of their claimed value.
For example, ExxonMobil’s oil reserves are reported to be 72 billion BOE (barrels of oil equivalent), but it has only 18 billion usable barrels. Its’ market capitalization of $432 billion should actually be $108. ”
Saudi Aramco’s value has been estimated at as much as $7 trillion but is actually worth only $1.7 trillion. Whoops.
And don’t get me started on Canadian Tar Sands. Oh, Okay…
“Producing synthetic crude oil from tar sands generates three times the global warming pollution of conventional crude production. Extracting tar sands bitumen – a low-grade, high-sulfur crude oil that must be extensively refined to be turned into fuel – uses vast amounts of energy and water.”
Alberta tar sands “proven” reserves total 168 barrels but only 42 billion can be used. Since it’s three times as polluting, actually only 14 billion barrels or 8.3% of its “reserves” can be used.
Are these companies and nations severely overvalued… Only if humans are smart enough to live. Does this look like a bubble? The laissez faire capital market should be screaming “sell!”
Former NASA scientist Dr. John Mankins speaks on Population growth, energy needs and third generation Space Solar Power.
The Department of Defense has concluded that climate change is the greatest threat to America.
“Climate change poses another significant challenge for the United States and the world at large. As greenhouse gas emissions increase, sea levels are rising, average global temperatures are increasing, and severe weather patterns are accelerating. These changes, coupled with other global dynamics, including growing, urbanizing, more affluent populations, and substantial economic growth in India, China, Brazil, and other nations, will devastate homes, land, and infrastructure. Climate change may exacerbate water scarcity and lead to sharp increases in food costs. The pressures caused by climate change will influence resource competition while placing additional burdens on economies, societies, and governance institutions around the world.
These effects are threat multipliers that will aggravate stressors abroad such as poverty, environmental degradation, political instability, and social tensions – conditions that can enable terrorist activity and other forms of violence.
“The Department will employ creative ways to address the impact of climate change, which will continue to affect the operating environment and the roles and missions that U.S. Armed Forces undertake. The Department will remain ready to operate in a changing environment amid the challenges of climate change and environmental damage. We have increased our preparedness for the consequences of environmental damage and continue to seek to mitigate these risks while taking advantage of opportunities. The Department’s operational readiness hinges on unimpeded access to land, air, and sea training and test space.
Consequently, we will complete a comprehensive assessment of all installations to assess the potential impacts of climate change on our missions and operational resiliency, and develop and implement plans to adapt as required.
Climate change also creates both a need and an opportunity for nations to work together, which the Department will seize through a range of initiatives. We are developing new policies, strategies, and plans, including the Department’s Arctic Strategy and our work in building humanitarian assistance and disaster response capabilities, both within the Department and with our allies and partners.”
The DoD has concluded that climate change represents the greatest threat to America. Then, who are our enemies and how do we fight them?
Terrorists are not the prime enemy. They seek to destroy the modern industrial infrastructure that is polluting the planet.
Religious fundamentalists are not the prime enemy. They seek to return to a pre-industrial age, with few modern, energy-demanding conveniences.
China is not the enemy. It seeks to expand its economy and pollutes as much as we do or more, but it is intent on creating modern technology to reduce carbon emissions. Russia is not the enemy, except in that its economy is based on selling fossil fuel…
Then, who is the enemy? It is those individuals and agencies who are polluting for profit, while using those profits to fund a disinformation propaganda campaign to deny climate change. It is the Koch brothers and the oil and gas companies and their executives and stockholders. We have met the enemy and they are us.
How do we fight the enemy? We must expose the enemy and charge them for the damage they have done and are doing. We must name them and shame them. We must expose their methods. We must take their names off buildings and think tanks and put it on the grave markers of those who have suffered and died from pollution, and on memorials for those hundreds of millions who will die in the future from the effects of climate change.
How to we fight the enemy…with what weapons? Building more fighter planes, bombers, tanks and aircraft carriers is not the way to fight them. Each of these machines uses petroleum or nuclear energy. The infrastructure to build these machines uses more energy. Spending our capital and our attention on prevention of non-critical threats wastes both energy and time. We must spend what we would on armed defense on defending the planet, as a whole, not just the United States, because that cannot be done. The climate does not stop or change at the border. We must fund the Department of Climate Defense, and spend the money on building solar panels, not drones; windmills, not tanks, space solar power, not aircraft carriers. We must organize a Conservation Corps to plant trees to soak up carbon; we must use our special forces to spread renewable energy technology around the world.
We realize that our security depends on the security of all nations, that is why we have troops deployed all over the world, seeking our enemies, supporting our friends… We must now take that perspective and understand that this fight is for the whole world, and we can lead it with a new Coalition of the Willing; willing not to fight those that will have no impact on the future, but those who will. We must create a common world defense, and a new expeditionary force, to lead us to the next frontier, where there is energy, living room, natural resources, and the future of mankind… the frontier to space.