Broad consensus on phasing out of fossil fuel subsidies
01 December 2015
Global fossil fuel subsidies totalled USD 548 billion in 2013. At the COP21 climate conference, which is under way in Paris, Prime Minister Stefan Löfven presented a communiqué to the Executive Secretary of the United Nations Framework Convention on Climate Change, Christiana Figueres. The communiqué outlines important messages on how the world can phase out fossil fuels. A large number of countries and organisations are backing the messages, which were produced by the Friends of Fossil Fuel Subsidy Reform group.
Sweden, alongside likeminded countries, advocates for the phasing out of subsidies to fossil energy through the Friends of Fossil Fuel Subsidy Reform group. The group’s aim is to promote such a phase-out globally. The communiqué that was presented at the climate conference calls on the international community to mitigate climate change by accelerating action to eliminate fossil fuel subsidies. The communiqué is a politically non-binding pledge on the importance of phasing out fossil fuel subsidies.
“It is impressive that so many countries and organisations are now coming together to phase out fossil fuel subsidies. This is a key issue that the international community must resolve to enable sustainable development,” said Mr Löfven.
Sweden has played an active role in the efforts to gather as many countries and organisations as possible behind the communiqué. Some 39 countries from around the world and 100 international organisations and companies now back the communiqué and its messages. At national level, Sweden is demonstrating its commitment and contributions through the Fossil-free Sweden initiative.
The communiqué was presented on 30 November at the COP21 Leaders Event on the first day of the conference in Paris. Mr Löfven was a moderator at the meeting, which was also attended by heads of state from Norway, New Zealand and the Netherlands, ministers from the Marshall Islands, Morocco and Peru, and representatives of the Organisation for Economic Cooperation and Development (OECD), the International Energy Agency (IEA) and the business sector.
Fact box: Friends of Fossil Fuel Subsidy Reform
Alongside some thirty other countries, Sweden is a member of the Friends of Fossil Fuel Subsidy Reform (FFFSR) group. The group was formed in 2010 to encourage G20 and APEC leaders to deliver on their commitment to phase out ineffective fossil fuel subsidies from 2009 onwards.
Fossil fuel subsidies totalled an estimated USD 548 billion in 2013, which is around five times higher than support to renewable energy. Various studies have shown that if subsidies are eliminated, global emissions would decrease significantly. Phasing out subsidies is an important and cost-effective measure and, moreover, the subsidies primarily benefit middle- and high-income earners.
The FFFSR countries jointly courted the G20 countries between 2011 and 2014 to push for fossil fuel subsidy reform in those countries. The group has also held seminars and workshops at UN climate conferences, the World Bank Spring Meeting and in connection with OECD meetings.
The 2016 contender says tax credits for the oil and gas sector should be eliminated.
By Clare Foran, July 23, 2015
Jeb Bush wants to get rid of tax credits for the oil and gas industry.
“I think we should phase out, through tax reform, the tax credits for wind, for solar, for the oil and gas sector, for all that stuff,” the 2016 Republican candidate said in New Hampshire on Wednesday, according to a video recorded by grassroots environmental group 350 Action.
“I don’t think we should pick winners and losers,” Bush added, saying: “I think tax reform ought to be to lower the rate as far as you can and eliminate as many of these subsidies, all of the things that impede the ability for a dynamic way to get to where we need to get, which is low-cost energy that is respectful of the environment.”
Bush’s comments arrived in response to questions from a 350 Action activist after the 2016 Republican contender appeared at an event hosted by the conservative advocacy group Americans for Prosperity in Manchester, New Hampshire.
When pressed by the activist on whether he would get rid of all fossil-fuel subsidies, Bush replied: “All of them. Wind, solar, all renewables, and oil and gas.”
US taxpayers subsidising world’s biggest fossil fuel companies
Shell, ExxonMobil and Marathon Petroleum got subsidises granted by politicians who received significant campaign contributions from the fossil fuel industry, Guardian investigation reveals
By Damian Carrington and Harry Davies, 12 May 2015 07.00 EDT
The world’s biggest and most profitable fossil fuel companies are receiving huge and rising subsidies from US taxpayers, a practice slammed as absurd by a presidential candidate given the threat of climate change.
A Guardian investigation of three specific projects, run by Shell, ExxonMobil and Marathon Petroleum, has revealed that the subsidises were all granted by politicians who received significant campaign contributions from the fossil fuel industry.
The Guardian has found that:
A proposed Shell petrochemical refinery in Pennsylvania is in line for $1.6bn (£1bn) in state subsidy, according to a deal struck in 2012 when the company made an annual profit of $26.8bn.
ExxonMobil’s upgrades to its Baton Rouge refinery in Louisiana are benefitting from $119m of state subsidy, with the support starting in 2011, when the company made a $41bn profit.
A jobs subsidy scheme worth $78m to Marathon Petroleum in Ohio began in 2011, when the company made $2.4bn in profit.
“At a time when scientists tell us we need to reduce carbon pollution to prevent catastrophic climate change, it is absurd to provide massive taxpayer subsidies that pad fossil-fuel companies’ already enormous profits,” said senator Bernie Sanders, who announced on 30 April he is running for president.
Sanders, with representative Keith Ellison, recently proposed an End Polluter Welfare Act, which they say would cut $135bn of US subsidies for fossil fuel companies over the next decade. “Between 2010 and 2014, the oil, coal, gas, utility, and natural resource extraction industries spent $1.8bn on lobbying, much of it in defence of these giveaways,” according to Sanders and Ellison.
“Subsidies to fossil fuel companies are completely inappropriate in this day and age,” said Stephen Kretzmann, executive director of Oil Change International, an NGO that analyses the costs of fossil fuels. OCI found in 2014 that US taxpayers were subsidising fossil fuel exploration and production alone by $21bn a year. In 2009, President Barack Obama called on the G20 to eliminate fossil fuel subsidies but since then US federal subsidies have risen by 45%.
Tax credits, defined as a subsidy by the World Trade Organisation, are a key route of support for the fossil fuel industry. Using the subsidy tracker tool created by the Good Jobs First group, the Guardian examined some of the biggest subsidies for specific projects.
Shell’s proposed $4bn plant in Pennsylvania is set to benefit from tax credits of $66m a year for 25 years. Shell has bought the site and has 10 supply contracts in place lasting up to 20 years, including from fracking companies extracting shale gas in the Marcellus shale field. The deal was struck by the then Republican governor, Tom Corbett, who received over $1m in campaign donations from the oil and gas industry. According to Guardian analysis of data compiled by Common Cause Pennsylvania, Shell have spent $1.2m on lobbying in Pennsylvania since 2011.
A Shell spokesman said: “Shell supports and endorses incentive programmes provided by state and local authorities that improve the business climate for capital investment, economic expansion and job growth. Shell would not have access to these incentive programmes without the support and approval from the representative state and local jurisdictions.”
ExxonMobil’s Baton Rouge refinery is the second-largest in the US. Since 2011, it has been benefitting from exemptions from industrial taxes, worth $118.9m over 10 years, according to the Good Jobs First database. The Republican governor of Louisiana, Bobby Jindal has expressed his pride in attracting investment from ExxonMobil. In state election campaigns between 2003 and 2013, he received 231 contributions from oil and gas companies and executives totalling $1,019,777, according to a list compiled by environmental groups.
A spokesman for ExxonMobil said: “ExxonMobil will not respond to Guardian inquiries because of its lack of objectivity on climate change reporting demonstrated by its campaign against companies that provide energy necessary for modern life, including newspapers.”
The Guardian is running a campaign asking the world’s biggest health charities, the Bill and Melinda Gates Foundation and the Wellcome Trust, to sell their fossil fuel investments on the basis that it is misguided to invest in companies dedicated to finding more oil, gas and coal when current reserves are already several times greater than can be safely burned. Many philanthropic organisations have already divested from fossil fuels, including the Rockefeller Brothers Fund whose wealth derives from Standard Oil, which went on to become ExxonMobil.
A spokesman for Marathon Petroleum said: “The tax credit recognises the enormous contribution we make to the Ohio economy through the taxes we pay and the well-paying jobs we maintain. We have more than doubled the 100 new jobs we committed to create.” The spokesman said the company paid billions of dollars in income and other taxes every year across the US.
“Big oil, gas, and coal have huge influence on politicians and governments and they get that influence the old fashioned way – they buy it,” said Kretzmann. “Through campaign finance, lobbying, advertising and superpac spending, the industry has many ways to influence candidates and government officials seeking re-election.”
He said fossil fuel subsidies were endemic in the US: “Every single well, pipeline, refinery, coal and gas plant in the country is heavily subsidised. Big Fossil’s lobbyists have done their jobs well for the last century.”
Ben Schreiber, at Friends of the Earth US, said. “There is a vibrant discussion about the best way to keep fossil fuels in the ground – from carbon taxation to divestment – but ending state and federal corporate welfare for polluters is one of the easiest places to start.”
Schreiber also defended subsidies for renewable energy: “Fossil fuels are a mature technology while renewable energy is nascent and still developing. It makes sense to subsidise technologies that are going to help solve climate change, but not to do the same for those that are causing the problem.”
Repost from Reuters [Editor: Significant quote: “‘Look at the towns. All they’re getting are more trains in their backyard and all the risk with no financial benefits,’ said Dan McCoy, the County Executive in Albany, New York, where taxpayer funds have contributed to growing oil-train shipments.” – RS]
U.S. taxpayers help fund oil-train boom amid safety concerns
By Jarrett Renshaw, Dec 14, 2014
(Reuters) – For the past 18 months, Americans from Albany to Oregon have voiced growing alarm over the rising number of oil-laden freight trains coursing through their cities, a trend they fear is endangering public safety.
In at least a handful of places, the public is also helping fund it.
States and the federal government have handed out tens of millions in public dollars to rail companies and government agencies to expand crude oil rail transportation across the country, a Reuters analysis has found.
The public assistance in states like New York, Pennsylvania, Ohio, Oklahoma and Oregon comes as railroads are posting record profits, and as state and federal authorities press for safety overhauls that the oil and rail industries have opposed, following several explosive derailments.
The Reuters analysis identified 10 federal and state grants either approved or pending approval, totaling $84.2 million, that helped boost the number of rail cars carrying crude oil across the nation.
The funds are a fraction of total public funding for railroads each year, and look small compared to the $24 billion railroads themselves are spending annually on infrastructure.
But with oil-train safety under heavy scrutiny, the public grants could be controversial and add to growing strains between the industry and some local communities who say they are ill-prepared to deal with oil spills or derailments.
“Look at the towns. All they’re getting are more trains in their backyard and all the risk with no financial benefits,” said Dan McCoy, the County Executive in Albany, New York, where taxpayer funds have contributed to growing oil-train shipments.
In May, Albany’s sheriff, Craig Apple, warned that regional emergency crews weren’t equipped to respond to any major derailment.
“I am not seeing any increases in tax revenue, but I am seeing an increase in the cost of emergency services,” McCoy said.
Since 2008, there have been at least 10 major oil-train derailments across the U.S. and Canada, including a disaster that killed 47 in a Quebec town last July.
Officials and rail executives offer a counter-argument: the funds help improve safety for an industry that is helping revive the economy in some places.
Last year, New York Governor Andrew Cuomo awarded CSX Railroad a $2 million grant to add a second 3.6-mile rail line just south of the state capital in a county that now handles about a fourth of the Bakken’s oil, a light, volatile crude whose vapors have exploded in several past derailments.
CSX spokesman Rob Doolitle said the new line allows the railroad to idle fewer trains in the region, block fewer crossings, and serve at least 200 different businesses more efficiently.
“Local communities benefit from increased capacity,” Doolittle said. CSX posted record revenues of $3.2 billion in the third quarter.
AN INDUSTRY TRANSFORMED
The taxpayer dollars are going to a rail industry that has transformed the U.S. energy market: Amid a shale-drilling boom that has overwhelmed the nation’s pipeline network, oil-train traffic has surged at least 42-fold since 2009, and 415,000 railcar loads of oil plied the nation’s tracks last year.
As oil-trains increasingly make up for a lack of pipelines, they share the tracks with passenger and other freight trains on some of the busiest U.S. rail corridors. Emergency responders in several regions have complained that they lack information to track them and quickly respond to accidents.
While federal law now requires rail operators carrying Bakken crude to report routes and the number of trains that transit through each state, railroads have been reluctant to share specifics publicly, citing security risks.
Philadelphia is one of the unlikely locales that has been both alarmed and enriched by the oil-by-rail industry.
In 2012, The Carlyle Group led a rescue of the East Coast’s biggest refinery, which had been slated for closure, aided in part by a state-backed aid package that included $10 million to build a new rail terminal.
The 335,000-barrel-a-day plant is making money once again thanks in large part to the rail terminal, which receives six miles of oil-laden railcars daily from North Dakota’s Bakken.
In September, Philadelphia Energy Solutions (PES), an oil refining complex controlled by hedge fund Carlyle Group, announced plans to sell shares in its crude-by-rail terminal, a move that may fetch hundreds of millions of dollars and reduce its corporate tax burden.
Carlyle declined comment, but the company has previously said that government assistance helped to save at least 850 jobs at PES and boost Pennsylvania’s economy.
Earlier this year, six railcars transporting Bakken oil to the PES rail terminal derailed on a bridge over the Schuylkill River in Philadelphia’s Center City. No oil spilled from the CSX-operated train, but images of railcars teetering above the city’s vital waterway shocked locals and prompted protests.
“It spooked a lot of people in Philadelphia, and really raised the profile of the issue of crude by rail, an issue most people don’t think about,” said Matt Walker, a director with the local Clean Air Council.
Citing high costs, oil and rail industry groups have resisted some of the U.S. Department of Transportation’s recent proposals to enhance crude-by-rail safety, which include quick retirement or retrofitting of older, accident-prone railcars, lower speed limits, and mandatory electronic railcar braking systems.
Railroads and local transport authorities say public grants are a public good.
Since 2011, Oklahoma has received two federal grants worth $8.6 million that were used to fund privately-held FarmRail System, a regional rail operator, to move more crude by rail out of the state’s Anadarko Basin.
“We see these grants as improving public safety, much like you spend money on improving a highway,” said Gary Ridley, the head of the Oklahoma’s transportation agency. Trains are better than oil trucks, which clog up roads, he said. Oklahoma Governor Mary Fallin recently announced a $100 million spending package to upgrade rail crossings in the state.
In Oregon, oil terminal giant Global Partners successfully lobbied state and county officials to fund $8.9 million in upgrades to the Portland and Western Railroad, which runs next to the Columbia River. As a result, Global was able to increase the number of oil-trains to its private rail hub in the state by more than a third, to 38 per month. Global declined comment.
“It really doesn’t matter whether the train is carrying crude oil or cotton puffs, they have the right to pass through,” Jerry Cole, the mayor of Rainier, Oregon, where oil-trains pass through daily. “All I can do is to make it as safe as possible.”
(Reporting by Jarrett Renshaw, editing by Jonathan Leff and John Pickering)