One Small Change That Could Stop Climate Change

President Barack Obama recently announced at the United Nations that he "will work with my colleagues at the G20 to phase out fossil-fuel subsidies so that we can better address our climate challenge."

Finally! I have been dreaming of this kind of leadership for years. Eliminating subsidies for the fossil fuel industry is the single best thing we can do to slow climate change. Wind, solar, tidal, and geothermal would be more financially competitive if our federal government did not give so many tax breaks to oil, gas and coal companies.

The Environmental Law Institute recently published a geeky policy document called "Estimating U.S. Government Subsidies to Energy Sources: 2002-2008" with very illuminating findings. The study rolls up all the U.S. federal government's 1) foregone tax revenue and 2) direct expenditures that have benefited the fossil fuel industry over the past six years and found that the fossil fuel industry received tax breaks of $72 billion* while renewable sources received only $29 billion. Note that over half of the "renewable" category, $16.8 billion, went to subsidize corn ethanol.

In my opinion, subsidies should go to young industries that need a little extra help while they refine technologies and scale up their operations, not to industries that have been around for over 100 years. What do you think would change if we stopped doling out billions each year to the fossil fuel industry?

* Fossil Fuel Industry subsidies, 2002-2008 (in millions)

Foreign Tax Credit ($15,300)
Credit for Production of Nonconventional Fuels ($14,097)
Oil and Gas Exploration & Development Expensing ($7,100)
Oil and Gas Excess Percentage over Cost Depletion ($5,441)
Credit for Enhanced Oil Recovery Costs ($1,575)
Characterizing Coal Royalty Payments as Capital Gains ($986)
Exclusion of Benefit Payments to Disabled Miners ($438)
Exclusion of Alternative Fuels from Fuel Excise Tax ($343)
Other-Fuel Exploration & Development Expensing ($342)
Other-Fuel Excess of Percentage over Cost Depletion ($323)
Deduction for Clean Fuel Vehicles and Refueling Property-Fossil Fuels ($209)
Exception from Passive Loss Limitations for Oil and Gas ($190)
Credit for Clean Coal Investment ($186)
Expensing Liquid Fuel Refineries ($164)
Special Rules for Mining Reclamation Reserves ($159)
Natural Gas Distribution Lines Treated as Fifteen-Year Modified Accelerated Cost Recovery System MACRS) Property ($138)
Sulfur Regulatory Compliance Incentives for Small Diesel Refiners (Combined) ($109)