Fossil Fuel Subsidies Are Just Stupid — Bloomberg

The title of new report by the Grantham Institute at London’s Imperial College says it all:

“Summer heat deaths in 854 European cities more than tripled due to climate change.”

“Extreme heat is the deadliest type of weather and officially reported heat deaths remain significantly underestimated,” the researchers wrote. “We use established peer-reviewed methodology to estimate the total number of heat related deaths in 854 cities during the recent heatwave and to calculate the proportion of these deaths that can be attributed to climate change. In total, we estimate climate change driven changes to the temperatures to have caused 16,469 additional excess deaths across the 854 cities, accounting for almost 70% of the estimated summer deaths.”

Friederike Otto, a climate scientist at Imperial College London and a co-author of the report, told The Guardian: “The causal chain from fossil fuel burning to rising heat and increased mortality is undeniable. If we had not continued to burn fossil fuels over the last decades, most of the estimated 24,400 people in Europe wouldn’t have died this summer.”

Burning stuff seems to be on the minds of lots of people today. On September 10, Bloomberg contributor Mark Gongloff, whose resumé includes stories for Fortune, Huffington Post, and the Wall Street Journal, penned a piece with another startling headline, this one being:

“The US Is Giving Away $35 Billion a Year to Cook the Planet”

Why would America do that? Because the beneficiaries have the government in their pocket? That is one possible explanation. If that sounds more like a Mafia shakedown than a government, you’re not far wrong. The price of US government subsidies for the fossil fuel industry has more than doubled in the last eight years, Gongloff wrote, and added, “Welfare for an industry that makes billions of dollars in profits and pollutes the climate is worse than useless. It’s self-destructive.”

The federal government gives oil, gas, and coal producers at least $34.8 billion in subsidies each year, according to a new study by Oil Change International. In 2017, OCI estimated these gifts at $14.7 billion annually. This increase took place while both Democrats and Republicans were in office, which illustrates “the difficulty of stopping its growth, much less reversing it.”

Some of the recent increases in federal subsidies to the fossil fuel industry could metastasize in coming years and expand to trillions of dollars. “When the world needs exponential growth in clean energy investments to avoid the most catastrophic effects of global heating, the US government will be bankrolling fossil fuel expansion and stoking the emergency,” Gongloff claimed.

“A lot of these subsidies have been relatively capped in output, with no danger of massive increase,” said Collin Rees, lead author of the Oil Change International report. “Now the danger is we have uncapped subsidies with massive potential for growth if they’re not stopped.”

The One Big Beautiful Bill passed by Congress earlier this year handed out $4 billion in new annual rewards or $40 billion over the next 10 years. The biggest gift was the expansion of a tax credit for capturing carbon dioxide, known as the Section 45Q credit. The law gave fossil fuel producers the same benefit for using captured carbon to pump more oil and gas — a process known as enhanced oil recovery — as they get for simply storing the carbon underground to, you know, help the planet.

45Q was also expanded by the Biden Administration in the Inflation Reduction Act, which BloombergNEF estimated at the time could become a $100 billion gift to all industries using carbon capture and storage, such as power plants, steel mills, and cement factories. According to a 2023 study published in the journal Environmental Research, the 45Q credit could encourage some power plants to spew more carbon than necessary just so they could get money for capturing it.

By the same token, the expansion of 45Q could boost the US taxpayers’ bill for backing CCS to $1.1 trillion to $3.8 trillion through 2050, according to a February analysis by the Institute for Energy Economics and Financial Analysis. The good news, if there is any to be had, is low-cost renewables will keep eating into the business case for fossil fuels, meaning there will be much less carbon to capture in the future.

Estimates of federal subsidies are almost certainly on the low side, given a lack of available data, Gangloff wrote. They don’t include the cost of the US military protecting fossil fuels around the world or government-backed finance for oil projects or the vast and growing toll on human health and prosperity of a changing climate, which the International Monetary Fund has estimated at $7 trillion annually.

“The world’s top five oil companies turned a $102 billion profit last year alone and returned $349 billion to shareholders in buybacks and dividends. They don’t need any more cash, especially not with their demand outlook so hazy,” Gangloff suggested in his article.

“The idea of taxing fossil-fuel companies to help defray the costs of adapting to a chaotic climate is already politically popular. Killing $35 billion in annual gifts to that same industry should be no less so. Think of all the clean energy and climate resilience that money could buy — not to mention affordable housing, and health care,” Gangloff said.

Coincidence Is Not Causality

His colleague Liam Denning has also weighed in recently in a Bloomberg article that excoriates Energy Secretary Chris Wright for being perhaps the dumbest person to ever hold that office. Wright, of course, owes his considerable wealth to those fossil fuel subsidies Gangloff mentioned.

“We know the inconvenient truth that burning fossil fuels, while transformational for civilization, also carries a growing and likely catastrophic cost. Back when the inconvenient documentary that took this knowledge mainstream came out, fossil fuel lobbyists tended to simply deny or muddy the scientific consensus. Such efforts have become less tenable, so an alternative narrative has arisen, pitched as pragmatism, whereby the incumbent energy system is basically immovable and we should all get over it and build seawalls,” Denning wrote.

Chris Wright says life expectancy has increased considerably since the fossil fuel era began, and he is correct. But he insists the increase is because of fossil fuels, a fallacy that Denning explodes by pointing out that mortality also rose during the time when asbestos was widely used as well. Wright, despite claiming to be a “science geek,” fails to understand that coincidence is not causality. A car crash in Des Moines may occur at precisely the same moment as high tide in the Bay of Fundy, but that doesn’t mean the two events are related. Denning then wrote this pithy paragraph:

“Wright points out that fossil fuels are hard to displace but doesn’t acknowledge the parallel point that clean technologies have made enormous progress, even in the US, despite at best patchy mechanisms to reward decarbonization. A lack of explicit carbon pricing is at once a huge headwind to clean tech and a huge implicit giveaway to hydrocarbons. The great paradox of the US fossil fuels industry is that it is apparently the foundation of American strength and yet, as the Republican tax and spending bill act showed, also requires endless subsidies and that its rivals be constrained in order to feel secure” (emphasis added).

Fossil fuel fools like to have it both ways. They want all the subsidies they can get but want to be protected from new technologies. This can be called hypocrisy, but a better name for it is lying. People are not living longer because of fossil fuels, Chris Wright. In fact, they are dying sooner because of them, as the Grantham Institute study makes plain.

America deserves leaders who are committed to improving the health and safety of all its citizens, not those who exist solely to line their own pockets at the people’s expense. It’s time to end the fossil fuel grift.