Accepting Responsibility For Our Broken Energy Policy
We’ve had discussions recently on the amount of subsidies that the fossil fuel industries receive from the federal government here in the U.S. To be sure, there is a great deal of hanky-panky played with these numbers. Let me go out on a limb here and suggest that the accounting method and total number that one chooses is often a function of the case one’s trying to make.
Normally, I simply say that it doesn’t matter; any amount is too much. After all, why on Earth would we want to provide incentive to promote damage to our ecosystems, weaknesses to our national security, lung disease, etc., especially when the subject industry is already the most profitable one on the planet?
But when I read a comment from “Pierre” earlier today: “How much is the ‘polluter not paying’ subsidy worth?” it started me thinking about this. This is a brilliant point, in that there are a ton of subsidies that this whole discussion normally sidesteps:
• The cost of the wars fought to maintain access to oil
• The cost of the roads that encourage the consumption of more gasoline (versus, say, railroads and trolleys)
• (The one he noted) The forbearance from the cost of cleaning up after themselves, i.e., absorbing the costs of the long-term environmental damage and lung disease they’re causing.
For the record, if we’re interested in quantifying these subsidies, each of these three are measured in trillions (not millions or billions) of dollars.
But let’s take a step back and clarify something. I presume by “the polluter,” Pierre is referring to the fossil fuel industries. But it’s not quite that simple. The energy companies find and sell energy resources. We buy them and burn them. In a very real sense, we’re both “the polluter.”
When my kids were little, I remember some of the words I chose in my attempts to teach personal responsibility. “Be the bigger person,” I recall telling my six-year-old son Jake when he was infuriated at the antics of his four-year-old sister, who had masterfully figured out how to “press his buttons.” I can’t tell you how proud I was many years later when I overheard him tell a teenage friend who had been insulted, “Dude, just chill. Be the bigger person.”
My point is that the energy industry, for all its faults, has provided us with what we wanted, and, in fact, demanded: mobility, convenience, and comfort. And some of the major (and minor) players in this industry did so at considerable risk. Without them, we’d be colder, lonelier, sicker, and far less worldly. Maybe it’s a mistake to be too steadfast in our condemnation now that we’ve (very recently) become tuned in to the issues of greenhouse gasses, climate change, etc.
Can we, as consumers, take some responsibility for the condition in which we find ourselves? I’ll speak first: I can. Obviously, I’d love the industry to knock off the deceit, and honestly embrace a program of providing clean, safe, affordable energy. But if we’re going to turn this around, it’s up to us to change the demands we’re putting on them.
If we were using solar today totally and fossil fuels came as an emerging issue, for comparison let us say fossil fuel was as clean as the sun. So all I am doing is reversing the table 180 deg. The opposition would say “Oh no, do you realize how much infrastructure would be needed to use oil, a gas station on every corner, refineries, etc.” You will be laying off all these third generation solar workers, what to do?
My point is the road forward is unknown; the road back has 20/20, fear itself is our problem here, a resistance to change and people in power unwilling to let go, or change.
good perspective. We still subsidies OIL, COAL, Nuclear and NG with no cap or reduction plan. Yet solar and wind are always on a 1 year plan that threatens to be dropped each time it comes up for renewal.
a gas car is less than 15% efficent and makes deadly exhaust yet we use it all the time. A COAL and Nuclear plant just boils water to make power, can’t ramp down and up as needed yet we use them for most of the energy.
It’s a real shame on us and progress.
We have no choice than use our conventional ways to move from point A to point B plus warm ourselves using fossil fuels and much less power to change top level subsidies decisions.
I am of the opinion that we will have to wait for China and its totalitarian government to change things around. Our western democracies are too involved in fund raising for re-elections every four years, and just ask yourself where most of that money comes from.
Good points, Craig. Reminds me of words I once wrote in a song I performed at a 20th EarthDay concert in Cincinnati, song titled “EarthNews”. One line in it went:
“Big polluters just like us
Turn our heads in disgust”
The discussion above assumes all or most of our worst anti-eco subsidies are going to the big nasty fossil fuel companies. But what about all the tax deductions for fossil fuel use which go to even small companies like mine?
I once wrote an op-ed in which I advocated for the elimination of all fossil fuel subsidies, including tax deductions for buyers of fossil fuels and fossil fuel equipment. Businesses of all sizes take these deductions routinely. Indeed, some might argue that many companies couldn’t be profitable without those energy deductions. But on the small end, like my biz, how does it make me a better biz or designer or consultant to deduct more energy and energy equipment expenses instead of less?
For example, in 1992, shortly after the Exxon Valdez catastrophe, AUDOBON had an article saying that if Americans could average 40 or more mpg, we could eliminate the need for imported petroleum and we wouldn’t need to worry anymore about huge incoming tanker catastrophes or to spend huge bucks to double-wall all our tankers as Congress eventually required. So I sold my 1989 manual 5-spd Camry business car which got 32 mpg and bought a Festiva which averaged 42 mpg over the 15 yrs.
When I did my accounting, I noticed how much less I had paid for the Festiva than the Camry and how much less I spent on fuel. My Festiva had actually increased how much tax I paid because I now had fewer business tax deductions for my business transportation than ever before. So I asked, why should IRS even allow deductions which go up automatically when a business vehicle is larger or more luxurious or more fuel-guzzling? Why should our tax code penalize a biz for buying a less costly and more fuel efficient vehicle?
Consider all the business tax deductions for energy bills around the USA. Also imagine all the deductions for conventional energy equipment, some of which is merely min-code in efficiency. So I began to think we should phase out all business fossil fuel and fossil fuel-using equipment deductions except when the equipment lowers use by at least some specified % or amount compared to minimum code standards.
Bottom line is there are many tax deductions for conventional energy use, many going to businesses well outside the energy sector, and these deductions affect our entire market as well as how we think as business people. So if we want to eliminate all the subsidies and deductions for fossil fuel, we need to be all-inclusive. As Craig says, WE consumers and businesses buy the energy sold by the energy sector. Only some of us are buying RE, and even RE, hybrid and all-electric buyers are still buying lots of energy from the traditional energy sectors. There are countless energy tax deductions affecting our market economics up and down that matrix.
Wouldn’t it be interesting to trade ending all fossil fuel subsidies, including tax deductions for annual energy use and energy equipment purchases, for an end to all subsidies for the efficiencies and alternatives we ourselves prefer? I think one main reason fossil fuels are so cheap is all the subsidies and deductions. If we leveled the playing field, the market economics would change in our favor even if our sector lost our subsidies too.
Yes, a level playing field would make all the difference in the world. As I’ve said more times than I can count, if those who generate and consume energy were paying the true and comprehensive costs, renewable energy would be deemed the deal of the century.
Yes it would, but Craig and anyone else who’s stumping for green energy, would you be complaining about the cost of everything going up, if the US Government stopped the fuel subsidies?
Before you answer, think of this. EVERYTHING you buy, everything you use, from your milk to your bicycle to your solar panels arrived from somewhere else via a truck that ran on that fuel our government subsidizes. In the 90’s I paid a visit to Japan at USN’s expense and when we were complaining about $1.29 a gallon for fuel, I saw $1.69 PER LITER for the same fuel just outside of Sasebo. We’re talking over 4 x the cost because their government doesn’t subsidize fuel.
So, now, think about this. Do you really want EVERYTHING you buy to go up 10-15% just to pay for the cost of Non-subsidized fuel? I’m not trying to squelch the idea of going green I just think that a total ban on subsidized fuel is wrong, limit it to passenger vehicles.
Why? Because everything you buy comes to you via subsidized fuel. Personally, I have a motorcycle that I commute on every day. My commute is almost 80 miles a day with no public transportation option and a bike gets well north of 40MPG and can still haul some groceries. My commute used to be 30 miles until an unfortunate series of events relating to a military deployment and US Government not having to follow their own rules. Now I’m stuck with a mortgage on a house in a small town and a job 3 towns over just to pay the bills. But that’s all history.
No one is going down to the docks and buying stuff off the cargo ships, no one is buying stuff from the rail heads. I know everything comes to me via a truck and that truck runs on subsidized fuels. So if you really want to end fuel subsidies, limit it to the end users. Let the dipsitck driving his H2 Hummer 5 miles to the store cough up for the extra fuel, but don’t make all of us who bike or walk to the store have to pay extra, too.
I think it is debatable whether there would in fact be an increase in overall average costs if the various fossil fuel subsidies were to be eliminated – especially if looked at on a decade time scale.
Why?
1. Governments formulate budgets to achieve a particular level of tax revenue.
Removing subsidies on fossil fuel use, or bringing in new or raised sales taxes on environmentally damaging substances or activities would allow reductions in other areas of taxation – for example, the government would have the necessary revenue to fund tax breaks for making businesses and homes more energy efficient, or for reductions in income tax.
2. Paying the “true” cost of fuel would drive a substantial improvement in the overall efficiency of the economy. In the EU according to 2010 figures, the economy produced $3,712 of revenue per ton of CO2 emissions compared to the US figure of $2,291, this in spite of the USA enjoying higher purchasing power parity adjusted per capita spending power of $48,100 compared to the EU figure of $34,000. (Usually increased purchasing power parity would increase GDP per ton of CO2 as services such as a haircut, accountancy services, rent etc. cost more and other factors being equal should result in roughly the same emissions)
http://en.wikipedia.org/wiki/List_of_countries_by_ratio_of_GDP_to_carbon_dioxide_emissions
3. Many businesses find that their profitability moves up with increases in their energy efficiency. Whilst there usually a capital cost up front, lifetime running costs are reduced – sometimes very substantially. As removing subsidy on fossil fuels would drive energy efficiency – along with extra government funding for efficiency, many businesses would probably grow and become more rather than less profitable.
Although what you said sounds good, you fail to consider that not every business can utilize a fiesta for their business use. In my business, I must move tons of equipment and product, and there isn’t a vehicle that will do this that gets 42 MPG. My solution was to buy an older (92′ diesel F350) vehicle and modified it to burn waste vegetable oil. Problem in this country are the subsidies and tax deductions. The best solution is to eliminate ALL subsidies (energy, farm, and all other businesses) and replace the IRS with the FAIRTAX system. Subsidies are outdated and seldom go to the small businesses that need them, but got to the mega-businesses who dDO NOT NEED them.
I think that the owners of the factories are traitors in a real sense
We should focus efforts in educating the consumers
The bill treating diseases resulting from pollution, can be decreased by reducing the annual energy consumption
Our energy wasteful and unhealthy life styles are also stimulating fossil fuels subsidies.In our postmodern world
human energy is highly neglected and underestimated.
Comments above which oppose eliminating conventional energy subsidies for consumers and energy tax deductions for businesses because it’ll increase everyone’s real energy expenses go to the root of our problem in this country with our governments. When did we come to think that our govs should be in the business of deciding who wins and who loses unless there is criminality or unethical, of who pays more and who pays less? After all, some of us use substantially less conventional energy already. Folks who use the most will pay the most if subsidies and deductions are eliminated. Isn’t that a healthy thing?
Anyway, we have a screwed up economic mess in this country. The more narrowly focused subsidies and bandaids we pile up, the more convoluted it gets. When we started early rounds of energy subsidies, we didn’t know much about environmental and health negative consequences of fuels like coal and petroleum. Heck, most folks were smoking tobacco back then, thinking that was healthy too. But now we know. Yet now we are too scared to change. As Ed Rendell’s new book says in its title, many US citizens and business leaders have made us appear like “A Nation of Wusses”, too afraid of change to implement any.
The day will come when we’ll be backed into a corner with no other options left but to change.
One place quick results can be gotten is with building efficiency. At our house we blow summer air through the basement and into the house for cheap cooling – and the soil close by has warmed up enough there is no longer a problem with pipes freezing. Using the savings from this and some other such things allows us to invest. PS, if you try this, use a dehumidifier, condensation can be fierce the first few years.
The latest project consists of 1/2″ PEX tubes trenched down under the basement, 1″ PEX tubes connecting to the attic, a heat collector made of the finned tubes used for base board heaters, a half barrel in the attic and a sump pump for circulation. Calculation based on water flow and temperature difference show transfer of heat is around 30,000 BTU per hour during the times when the attic is warm enough. For winter, the system is drained down.
Craig, just a question concerning fossil fuel subsidizes. EXACTLY what is paid or tax credited in the fossil fuel industry? I know about the well depletion tax credit but that applies to those producers who are on the small side of company size designed to help small producers compete with the big boys. What else is subsidized?
Reblogged this on Energy post.