U.S. Fossil Fuel Subsidies Exceed Pentagon Spending, says International Monetary Fund Report

Study: U.S. Fossil Fuel Subsidies Exceed Pentagon Spending

The world would be richer and healthier if the full costs of fossil fuels were paid, according to a new report from the International Monetary Fund

By Tim Dickinson | May 8, 2019

The United States has spent more subsidizing fossil fuels in recent years than it has on defense spending, according to a new report from the International Monetary Fund.

The IMF found that direct and indirect subsidies for coal, oil and gas in the U.S. reached $649 billion in 2015. Pentagon spending that same year was $599 billion.

The study defines “subsidy” very broadly, as many economists do. It accounts for the “differences between actual consumer fuel prices and how much consumers would pay if prices fully reflected supply costs plus the taxes needed to reflect environmental costs” and other damage, including premature deaths from air pollution.

These subsidies are largely invisible to the public, and don’t appear in national budgets. But according the the IMF, the world spent $4.7 trillion — or 6.3 percent of global GDP — in 2015 to subsidize fossil fuel use, a figure it estimated rose to $5.2 trillion in 2017. China, which is heavily reliant on coal and has major air-pollution problems, was the largest subsidizer by far, at $1.4 trillion in 2015. But the U.S. ranked second in the world.

The human, environmental and economic toll of these subsidies is shocking to the conscience. The authors found that if fossil fuels had been fairly priced in 2015, global carbon emissions would have been slashed by 28 percent. Deaths from fossil fuel-linked air pollution would have dropped by nearly half.

Oil, gas and coal companies — and their stooges in public office — have long argued that making consumers pay for the full impacts of fossil fuel use would cripple the economy. The IMF experts call bs on this idea, revealing that the world would, in fact, be more prosperous. Eliminating subsidies for fossil fuels would have created global “net economic welfare gains” in 2015 of “more than $1.3 trillion, or 1.7 percent of global GDP,” the study found. (These net gains are “calculated as the benefits from reduced environmental damage and higher revenue minus the losses from consumers facing higher energy prices.”)

For the United States, the $649 billion in fossil fuel subsidies exceeded even the extravagant amount of money the country spent on defense. To offer a sense of scale, Pentagon spending accounted for 54 percent of the discretionary federal budget in 2015. In comparison to another important, but less well-funded part of the federal budget, fossil fuel subsidies were nearly 10 times what Congress spent on education. Broken down to an individual level, fossil fuel subsidies cost every man, woman and child in the United States $2,028 that year.

At the opening of the IMF’s spring meetings in April, Managing Director Christine Lagarde laid out the benefits she sees in properly pricing fossil fuels. “The numbers are quite staggering” she said, referring to the savings that could be achieved “fiscally, but also in terms of human life, if there had been the right price on carbon emission as of 2015.”

Lagarde continued to rattle off the benefits to humanity of realizing these savings. “There would be more public spending available to build hospitals, to build roads, to build schools and to support education and health for the people,” she said.

For Lagarde and the IMF, the conclusion was obvious: “We believe that removing fossil fuel subsidies is the right way to go.”

Link to the article at Rolling Stone here 

Report: Wind and Solar Power Reduce Pollution, Benefit Our Health and Climate, and Save Money

Wind and solar power are saving Americans an astounding amount of money

Not getting sick and dying from pollution is worth quite a bit, it turns out.

By David Roberts  | Vox.com | Aug 18, 2017

Wind and solar power are subsidized by just about every major country in the world, either directly or indirectly through tax breaks, mandates, and regulations.

The main rationale for these subsidies is that wind and solar produce benefits to society that are not captured in their market price (a.k.a. “positive externalities”). Specifically, wind and solar power reduce pollution, which reduces sickness, missed work days, and early deaths. Every wind farm or solar field displaces some other form of power generation (usually coal or natural gas) that would have polluted more.

Subsidies for renewable energy sources are meant to remedy this market failure, to make the market value of renewables more accurately reflect their total social value.

This raises an obvious question: Are renewable energy subsidies doing the job? That is to say, are they accurately reflecting the size and nature of their benefits to society?

Researchers at the Lawrence Berkeley Lab published a comprehensive report on the health and environmental benefits of wind and solar in the US between 2007 (when the market was virtually nothing) and 2015 (after years of explosive market growth).

Below are the main conclusions:

• From 2007 to 2015, wind and solar in the US reduced SO2, NOx, and PM2.5 by 1.0, 0.6, and 0.05 million tons respectively;
• Reduction of those local air pollutants helped avoid 7,000 premature deaths (the central estimate in a range from 3,000 to 12,700);
• Those avoided deaths, along with other public health impacts, are worth a cumulative $56 billion (the central estimate in a range from $30 to $113 billion);
• Wind and solar also reduced CO2 emissions, to the tune of $32 billion in avoided climate costs (the central estimate in a range from $5 to $107 billion).

If you add up those central estimates, wind and solar saved Americans around $88 billion in health and environmental costs over eight years. Not bad.

Costs and benefits

In this case, as in all such cases, it is somewhat misleading to simply compare total subsidies with total health and environmental benefits. The total amounts are not all that matters. It also matters how costs and benefits are distributed — i.e., equity matters as well.

To put it bluntly: A dollar in federal taxes is not equivalent to a dollar of avoided health and environmental costs. The latter dollar is worth more than the former dollar.

Why is that? Simple: Federal taxes come disproportionately from the wealthy, via our progressive federal income tax, but health and environmental benefits disproportionately help the poor. And as any good economist will tell you, the same dollar is worth more to a poor person than it is to a rich person.

This is something that often gets lost in discussions of environmental regulations. It’s not just that their total benefits almost always exceed their direct costs. It’s that those benefits are uniquely egalitarian and progressive.

In the case of climate change, any reduction in CO2 emissions benefits everyone on Earth (egalitarian), while disproportionately helping the poor, who suffer earliest and most from climate impacts (progressive).

In the case of local air-quality benefits, cleaner air benefits everyone in the region who breathes (egalitarian), while disproportionately helping the poor, who are more likely to live in close proximity to fossil fuel power plants (progressive).

In terms of equity, converting a dollar of wealthy people’s money into a dollar of health for low-income communities seems like a good deal to me. And if you can get multiple dollars of low-income health benefit for every dollar of high-income taxes, well, that’s a no brainer.

Everybody breathes. Any dollar of federal income taxes used to produce a dollar of air and climate benefits is a net gain for justice.

Excerpts of the article are shown above. To read the full article, visit Vox.com