Category Archives: Fossil fuels

US taxpayers subsidizing world’s biggest fossil fuel companies

Repost from The Guardian

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
Marathon Petroleum refinery in Canton, Ohio, got a job subsidy scheme worth $78m when it started in 2011. Photograph: PR

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.

In April, the president of the World Bank called for the subsidies to be scrapped immediately as poorer nations were feeling “the boot of climate change on their neck”. Globally in 2013, the most recent figures available,the coal, oil and gas industries benefited from subsidies of $550bn, four times those given to renewable energy.

“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%.

“Climate science is clear that the vast majority of existing reserves will have to stay in the ground,” Kretzmann said. “Yet our government spends many tens of billions of our tax dollars – every year – making it more profitable for the fossil fuel industry to produce more.”

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.

In Ohio, Marathon Petroleum is benefitting from a 15-year tax credit for retaining 1,650 jobs and a 10-year tax credit for creating 100 new jobs. The subsidy is worth $78.5m, according to the Good Jobs First database. “I think Marathon always wanted to be here,” Republican governor John Kasich said in 2011. “All we’re doing is helping them.” In 2011, Kasich was named as the top recipient of oil and gas donations in Ohio, having received $213, 519. The same year Kasich appointed Marathon Petroleum’s CEO to the board of Jobs Ohio, a semi-private group “in charge of the economic growth in the state of Ohio”.

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.”

US House approves $279 million renewable energy cut; raises funding for fossil fuel research by $34 million

Press Release from Friends of the Earth
[Editor:  As you might expect, this travesty was passed on a nearly complete party line vote, with 230 Republicans and 10 Dems in favor.  Dems voting FOR the bill included:  A. Dutch Ruppersberger MD, Ami Bera CA, Brad Ashford NE, Collin Peterson MN, Doris Matsui CA, Filemon Vela TX, Gene Green TX, Henry Cuellar TX, Jim Costa CA, and William Keating MA.  Republicans voting AGAINST the bill included: Christopher Gibson NY, James Sensenbrenner Jr. WI, Joseph Heck NV, Justin Amash MI, Mo Brooks AL, Thomas Massie KY, Walter Jones Jr. NC.   Track the bill here.  – RS]

House approves $279 million renewable energy cut

By: Kate Colwell, May. 1, 2015

WASHINGTON, D.C. — The House of Representatives passed H.R. 2028, “The Energy and Water Development and Related Agencies Appropriations Act of 2016,” by a vote of 240-177.

The bill sets funding levels for important programs within the U.S. Departments of Energy, Interior, and the Army Corps of Engineers. While staying within the limits set by the sequester, the bill manages to raise funding for fossil fuel research by $34 million from 2015 levels while cutting renewable energy and efficiency research by $279 million. Simultaneously, it is packed with policy riders that undermine bedrock environmental laws like the Clean Water Act and limit the Environmental Protection Agency’s ability to study the dangers of hydraulic fracturing.

Friends of the Earth Climate and Energy Campaigner Lukas Ross issued the following statement in response:

Shoveling more of our tax dollars into the pockets of ExxonMobil and the Koch Brothers while defunding clean energy is climate denial at its worst. Fossil fuel interests don’t need more money. Solutions to the climate crisis do.

From hobbling the Clean Water Act to limiting the Environmental Protection Agency’s ability to even study fracking, House Speaker John Boehner is continuing his assault on the air we breathe and the water we drink.

###

Expert contact: Lukas Ross, (202) 222-0724, lross@foe.org
Communications contact: Kate Colwell, (202) 222-0744, kcolwell@foe.org

Whatever Shall We Do with All this Extra Oil? Oil companies want the crude-export ban lifted. Is that a good idea?

Repost from onEarth, Natural Resources Defense Council

Whatever Shall We Do with All this Extra Oil?

Oil companies want the crude-export ban lifted. Is that a good idea?
By Brian Palmer | December 13, 2014

If oil industry lobbyists didn’t have so much money, Congress would get pretty sick of them. They’re constantly whining. They don’t like the carbon pollution rules. Fuel-economy standards are too tight. Something about a pipeline from Canada. Today, they’re back on Capitol Hill moaning about the crude-export ban.

What’s that you say? You’ve never even heard of the crude-export ban? Well, now you have, and I’ve compiled a few FAQs for you.

What does the ban say?

The short answer: Crude oil drilled in the United States must be refined in the country. But as with most laws, there are exceptions. Companies can export oil to be refined in Canada as long as the products are sold there or back to the States. Some Alaskan crude has been exported. And a particular kind of heavy crude from California can be sent abroad because presidents George H.W. Bush and Bill Clinton decided it was in the national interest. Such exceptions can be significant: Total exports peaked at 104 million barrels in 1980, representing about 3 percent of total U.S. extraction that year. In recent years, though, that number has fallen below 50 million barrels.

That law’s been around since the 1970s. What’s the big deal now?

Well, we’re talking about an industry in which greed is considered good. Money, of course! Until recently, energy companies weren’t drilling enough oil to make a big splash on the international market. But U.S. production surged by nearly 50 percent between 2008 and 2013, and those CEOs now think they can take home even bigger bonuses if they’re allowed to sell abroad.

Why was it created in the first place?

Basically because the Arab members of the Organization of Petroleum Exporting Countries got mad that the United States and a few other countries were siding with Israel during the 1973 Arab-Israeli War—and cut production and banned petroleum exports to those nations. The price of crude quadrupled, causing a five-month-long oil crisis that majorly disrupted global commerce and American lives. Since then, energy independence has been a goal for every U.S. president; Gerald Ford, for example, signed the 1975 Energy Policy and Conservation Act, which prohibited most crude exports and established a national strategic oil reserve.

Will I pay more for gas either way?

The ban certainly depresses the price of U.S.-produced crude oil, but gas prices involve a lot of factors. Energy analysts and industry advocates have debated the ban’s effects for years. So, in an attempt to settle the argument, the somewhat more impartial U.S. Energy Information Administration recently published a report on what would happen to gas prices if exports were allowed. You can read it here if you’re an oil-price wonk. Here’s the short version, from the organization’s administrator, Adam Sieminski: “[I]t probably wouldn’t do a great deal one way or the other with gasoline prices.”

Apparently, when it comes to economics, the controversy has more to do with profits than your family budget.

What would it mean for the climate if we allowed the exports?

It might be bad news. In an era of high domestic production, the ban holds down the price of West Texas Intermediate, North America’s benchmark crude, which then keeps Canada’s tar sands crude prices low. (The price points of the two crudes move roughly in sync.) So if Congress lifts the ban, the tar sands industry, which is currently in a major funk, could be saved—and this would mean a lot more extraction of the most carbon-intensive fossil fuel source around.

That’s the theory. And a March study from Oil Change International supports it: The report concluded that allowing exports would result in added carbon emissions equivalent to the output of 42 coal plants. The factors influencing global oil prices are complex, though, so it’s difficult to say exactly how much fossil fuel the crude-export ban is keeping in the ground.

The lack of certainty, however, makes its own point. Before Congress even considers repealing a 39-year-old law dealing directly with fossil fuels, it ought to understand the implications for climate change. It’s appalling that politicians would consider lifting the ban without full information. But I guess they’re not scientists.

 

 

America’s new and improved energy mix

Repost from Fuel Fix
[Editor:  Significant quote: “Since 2008, wind and solar energy capacity in the U.S. has tripled. A new report from the Energy Information Administration found that electricity generated from wind and solar grew a lot faster than electricity generated by fossil fuels last year.”  – RS]

Guest commentary: America’s new and improved energy mix

By Paul Dickerson and Thomas R. Burton III
Mintz Levin, April 25, 2015 8:00 am
(Sam Hodgson/Bloomberg)

Not too long ago, America was governed by an either/or energy market. Back in the 1970s and early 1980s, the rise and subsequent demise of solar energy as a viable energy alternative was directly related to the jump and collapse in crude prices before and after the OPEC oil embargo. Solar was resuscitated – along with a host of other nascent alternatives – in the first decade of this century when oil prices spiked once again. Plenty of pundits warned that investments in solar, wind and other energy alternatives would prove short-sighted when the price of oil finally retreated.

But something significant happened along the way: demand for energy alternatives became untethered from oil and natural gas prices. At a time when the price of crude oil has plunged by more than half and natural gas prices have plumbed two-year lows, growth in energy alternatives has actually accelerated. Since 2008, wind and solar energy capacity in the U.S. has tripled. A new report from the Energy Information Administration found that electricity generated from wind and solar grew a lot faster than electricity generated by fossil fuels last year. So-called distributed generation – a better proxy for real-time demand because it measures installations such as solar panels by end users and not utilities – exhibited even faster growth. In fact, by the time you’ve read this, another new solar project will have come online (it happens every 150 seconds).

A host of drivers help explain why these energy technologies are holding their own this time around. Whether you agree with them or not, growing concerns about climate change and energy’s role in it has created generous federal and state incentives for energy sources that aren’t derived from fossil fuels.

Incentivized by these policies, public and private sector innovation has driven down the cost of these technologies so they can increasingly compete on price even as their subsidies expire. Wind energy’s dramatic success here in Texas is a key reason why state senator Troy Fraser, a key proponent of Texas’s Renewable Portfolio Standard and Competitive Renewable Energy Zones, recently argued that those programs have accomplished their objective and are no longer needed.

Finally, innovation has migrated to the industry’s financing models. Previously, much of solar’s growth was driven by technology advancements. More recently, however, growth is being driven by financial improvements such as more flexible leasing models, a greater availability of capital that lowers costs for installers, and better analytics that enable installers to target customers more effectively. The result has been a rapid change to the competitive landscape, which has transformed and invigorated the market.

By now you might be wondering: Why does this matter to me? The answer is because there are huge implications from diversifying our nation’s energy supply.

The first benefit is the ability to hedge our energy positions when the price of one technology soars. Much in the way that investors are adding alternative investments to complement their holdings in stocks and bonds, a national energy portfolio that can draw on solar, wind and other alternatives is much less susceptible to downside risks. While still a small piece of the overall energy pie, these energy technologies give us a degree of flexibility in weathering market fluctuations. This flexibility makes us less reliant on any one energy source, putting downward pressure on the prices we pay to heat or cool our homes or fuel our cars.

The second big benefit is ensuring the reliability of our energy supply. Solar and wind technologies need to work in concert with 24/7 solutions such as natural gas since they can’t produce energy all of the time. Having access to more alternatives gives our electricity grid operators the flexibility to prevent or work around disruptions, use real-time usage data to identify and tap the most efficient energy sources at all times, and continue to meet our growing energy demands. Of course, we still have some work to do in this respect, and we urge federal and state legislators to continue to support programs that help develop the technologies needed to seamlessly integrate our growing array of energy choices.

A third reason, one that we are painfully familiar with as much of Texas remains gripped by drought, is water. One of the biggest demands for water is power generation, and as people continue to move to Texas, demand for electricity will continue to rise. By developing wind and solar sources, we will ease the burden of that growth on our already stressed water supplies.

Finally, a nation with greater flexibility in the way it meets its energy needs is one far less prone to the will or whims of others. In recent years, the term “energy independence” has been thrown around a lot. It’s a laudable goal, but we can’t achieve it by drilling alone. Before we can have true energy independence, we first must have energy diversity.


Thomas R. Burton III is the founder and chair of the Energy & Clean Technology Practice at Mintz Levin in Boston. Paul Dickerson, of counsel at the firm, is a former chief operating officer at the US Department of Energy.