Quantcast

New Report Reveals Additional Fossil Fuel Subsidies Equaling $4 Billion Each Year

Energy

Oil Change International

By David Turnbull

A new report released today by Oil Change International and Earth Track exposes a largely unaccounted for subsidy to the fossil fuel industry, valued at roughly $4 billion per year and growing.

New analysis quantifies the value of tax avoidance by the fossil fuel industry through a corporate structure called “master limited partnerships (MLPs).” Though eliminated for most U.S. industries more than a quarter century ago, special rules protected eligibility for fossil fuels, and have allowed a growing range of oil and gas activities to escape corporate income taxes entirely.

The reportToo Big to Ignore: Subsidies to Fossil Fuel Master Limited Partnerships, finds that the oil, gas and coal sectors have increasingly dominated the MLP universe, now comprising well over three-quarters of the total. Existing estimates of the taxpayer costs associated with fossil fuel MLPs are deceptively low, reducing the pressure to end this tax break once and for all.

MLPs, such as those created by Enbridge, Sunoco and TransCanada, not only enable firms to escape corporate income taxes on profits, but also to delay most tax payments on distributions to partners by many years. As Forbes has said, MLPs are an “income and a tax shelter rolled into one investment.”

The MLP structure, according to the new report, cost the U.S. treasury as much as $13 billion in lost tax revenue between 2009 and 2012, a figure six times larger than previous estimates. Fossil fuel interests continue to convert to MLPs at an alarming rate through asset spin-offs, mergers and by seeking expanded eligibility granted not only by Congress, but also through rather secretive Internal Revenue Service (IRS) rulings.

“Not only does the U.S. oil boom imperil our communities and climate, but the increasing use of master limited partnerships allows the industry to pay even less of its share of the taxes needed to support those same communities,” said David Turnbull, campaigns director of Oil Change International. “The fossil fuel industry is busy destroying our air, water, land and climate, all the while finding new ways to avoid taxes.”

Oil and gas master limited partnerships (MLPs) dominate sector by market-cap as well

“Tax subsidies to fossil fuels through master limited partnerships go against both the fiscal and environmental interests of our country, yet are repeatedly overlooked in most federal oversight reports on subsidies,” said Doug Koplow of Earth Track, the report’s author. 

“Though recent efforts have looked to expand master limited partnership subsidies to some renewable energy resources, the evidence suggests that the fossil fuel sector will continue to capture the vast majority of the MLP subsidies even with an expansion," Koplow continues. "In the context of the climate crisis we face, the continuation of this subsidy to fossil fuels is inappropriate regardless of any potential benefits to new industries.”

Visit EcoWatch’s ENERGY page for more related news on this topic.

——–

SHARE YOUR THOUGHTS BELOW: Should these subsidies be applied to the renewable energy industry as well, or eliminated all together?

——–

EcoWatch Daily Newsletter

Salmon fry before being released just outside San Francisco Bay. Jim Wilson / The New York Times / Redux

By Alisa Opar

For Chinook salmon, the urge to return home and spawn isn't just strong — it's imperative. And for the first time in more than 65 years, at least 23 fish that migrated as juveniles from California's San Joaquin River and into the Pacific Ocean have heeded that call and returned as adults during the annual spring run.

Read More Show Less
AnnaPustynnikova / iStock / Getty Images

By Kerri-Ann Jennings, MS, RD

Shiitake mushrooms are one of the most popular mushrooms worldwide.

Read More Show Less
Sponsored
Protesters hold a banner and a placard while blocking off the road during a protest against Air pollution in London. Ryan Ashcroft / SOPA Images / LightRocket / Getty Images

By Jessica Corbett

Dozens of students, parents, teachers and professionals joined a Friday protest organized by Extinction Rebellion that temporarily stalled morning rush-hour traffic in London's southeasten borough of Lewisham to push politicians to more boldly address dangerous air pollution across the city.

Read More Show Less

Jose A. Bernat Bacete / Moment / Getty Images

By Bridget Shirvell

On a farm in upstate New York, a cheese brand is turning millions of pounds of food scraps into electricity needed to power its on-site businesses. Founded by eight families, each with their own dairy farms, Craigs Creamery doesn't just produce various types of cheddar, mozzarella, Swiss and Muenster cheeses, sold in chunks, slices, shreds and snack bars; they're also committed to becoming a zero-waste operation.

Read More Show Less
Coal ash has contaminated the Vermilion River in Illinois. Eco-Justice Collaborative / CC BY-SA 2.0

By Jessica A. Knoblauch

Summers in the Midwest are great for outdoor activities like growing your garden or cooling off in one of the area's many lakes and streams. But some waters aren't as clean as they should be.

That's in part because coal companies have long buried toxic waste known as coal ash near many of the Midwest's iconic waterways, including Lake Michigan. Though coal ash dumps can leak harmful chemicals like arsenic and cadmium into nearby waters, regulators have done little to address these toxic sites. As a result, the Midwest is now littered with coal ash dumps, with Illinois containing the most leaking sites in the country.

Read More Show Less
Sponsored

picture-alliance / AP Photo / NOAA Pacific Islands Fisheries Science Center

The Group of 20 major economies agreed a deal to reduce marine pollution at a meeting of their environment ministers on Sunday in Karuizawa, Japan.

Read More Show Less
Pope Francis holds his General Weekly Audience in St. Peter's Square on Aug. 29, 2018 in Vatican City, Vatican. Giulio Origlia / Getty Images

Pope Francis declared a climate emergency Friday as he met with oil industry executives and some of their biggest investors to urge them to act on the climate crisis.

Read More Show Less
A vegetarian bowl with quinoa fritters. Westend61 / Getty Images

By Ketura Persellin

You've likely heard that eating meat and poultry isn't good for your health or the planet. Recent news from Washington may make meat even less palatable: Pork inspections may be taken over by the industry itself, if a Trump administration proposal goes into effect, putting tests for deadly pathogens into the hands of the industry.

Read More Show Less