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The $88 Billion Fossil Fuel Bailout for Oil, Gas and Coal Exploration
Many developed nations talk about ending our addiction on fossil fuels, about the need for radical cuts in carbon dioxide in order to avoid catastrophic climate change and yet, at the same time, they continue to subsidize the exploration of fossil fuels.
Despite repeated pledges to end subsidizing fossil fuels, governments are still spending billions doing so. Five years ago, the G20 pledged to the phase out of ‘inefficient’ fossil fuel subsidies and re-iterated the call last year in Saint Petersburg in 2013.
Yet a new report by the Overseas Development Institute and Oil Change International, published on the eve of this year’s G20 Leaders’ Summit, on Nov. 15 -16 in Australia, has found that governments are still spending a whopping $88 billion every year supporting fossil fuel exploration.
Amazingly, this is over double what the oil and gas companies themselves are investing. In 2013, the top 20 private oil and gas companies invested just $37 billion in exploration across the globe, less than half of that being ploughed in annually by G20 governments.
The madness of the situation is that the governments know that the majority of the oil and gas that is discovered needs to be kept in the ground if we are to avoid dangerous runaway climate change.
Indeed, the report argues that, by providing subsidies for fossil-fuel exploration, the G20 countries are creating a "triple-lose" scenario: They are directing large volumes of finance into high-carbon assets that cannot be exploited without catastrophic climate effects; whilst diverting investment from economic low-carbon alternatives such as solar, wind and hydro-power.
And finally they are undermining the prospects for an ambitious climate deal in 2015.
The report, The fossil fuel bailout: G20 subsidies for oil, gas and coal exploration, is the first detailed breakdown of fossil fuel exploration subsidies by all G20 countries.
It shows that with rising costs for hard-to-reach reserves, and falling coal and oil prices, generous public subsidies are propping up fossil fuel exploration which would otherwise be deemed uneconomic.
The worst villain is, not surprisingly, the U.S. which splashed out $5.1 billion annually in subsidies for fossil fuel exploration in 2013—ironically almost double the level in 2009 when the G20 pledged to phase out fossil fuel subsidies. Although President Obama has proposed to cut subsidies, the oil-washed Congress has failed to pass any subsidy cuts.
Next up is Australia, which is providing $3.5 billion a year for the development of fossil fuel resources both onshore and offshore. President Putin’s Russia provides $2.4 billion in subsidies annually, including in the Arctic, the first region we should be disinvesting from and where the ravages of climate change are already being felt.
Not to be outdone, and trying to prop up its ailing North Sea reserves, the United Kingdom gives more than $1.2 billion in subsidies. Many of the companies receiving tax breaks are international companies such as Total, Statoil, Centrica and Chevron.
The UK government is also subsidizing fossil fuel extraction abroad, spending $663 million annually in public finance for overseas exploration including in Siberia in Russia, Brazil, India, Indonesia, Nigeria, Guinea and Ghana.
Perversely you end up with a “merry-go-round” of countries supporting each others’ companies. The US subsidizes exploration in Columbia, Nigeria and Russia, while Russia is subsidizing exploration in Venezuela and China, which in turn supports companies exploring Canada, Brazil and Mexico.
The report also highlights US$521 million in public finance is being channelled into fossil fuel exploration by the G20 through multilateral development banks, of which the World Bank Group is responsible for two-thirds.
Oil Change International’s Director Stephen Kretzmann says of the new research, “Five years ago, G20 governments pledged to both phase out fossil fuel subsidies and take action to limit climate change. Immediately ending exploration subsidies is the clearest next step on both fronts.”
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Speaking during a conference in Washington, DC in June, Derrick Morgan, senior vice president for federal and regulatory affairs at the American Fuel & Petrochemical Manufacturers (AFPM), touted "model legislation" that states across the nation have passed in recent months.
AFPM represents a number of major fossil fuel giants, including Chevron, Koch Industries and ExxonMobil.
"We've seen a lot of success at the state level, particularly starting with Oklahoma in 2017," said Morgan, citing Dakota Access Pipeline protests as the motivation behind the aggressive lobbying effort. "We're up to nine states that have passed laws that are substantially close to the model policy that you have in your packet."
Big Oil is now using its political power to try and criminalize protests of oil & gas infrastructure.— Friends of the Earth (@foe_us) August 19, 2019
"This legislation has potential to punish public participation and mischaracterize advocacy protected by the First Amendment."https://t.co/bmiHjONEhy
The audio recording comes just months after Texas Gov. Greg Abbott signed into law legislation that would punish anti-pipeline demonstrators with up to 10 years in prison, a move environmentalists condemned as a flagrant attack on free expression.
"Big Oil is hijacking our legislative system," Dallas Goldtooth of the Indigenous Environmental Network said after the Texas Senate passed the bill in May.
As The Intercept's Lee Fang reported Monday, the model legislation Morgan cited in his remarks "has been introduced in various forms in 22 states and passed in ... Texas, Louisiana, Oklahoma, Tennessee, Missouri, Indiana, Iowa, South Dakota, and North Dakota."
"The AFPM lobbyist also boasted that the template legislation has enjoyed bipartisan support," according to Fang. "In Louisiana, Democratic Gov. John Bel Edwards signed the version of the bill there, which is being challenged by the Center for Constitutional Rights. Even in Illinois, Morgan noted, 'We almost got that across the finish line in a very Democratic-dominated legislature.' The bill did not pass as it got pushed aside over time constraints at the end of the legislative session."
Many of the state bills restricting the right to protest have been "drafted by companies and passed through groups like ALEC, the secretive group of corporate lobbyists trying to rewrite state laws to benefit corporations over people." @greenpeaceusa https://t.co/ZxpTjWdrwT— Stand Up To ALEC (@StandUpToALEC) May 6, 2019
Reposted with permission from our media associate Common Dreams.