Fossil Fuel Subsidies

Sat, 2014-09-13 07:00Guest
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Subsidizing Carbon Craziness: How Taxpayer Dollars for Capturing Carbon Greenwash Dirty Energy

Subsidy Spotlight

This is a guest post by Anna Simonton published with permission from Oil Change International 

The dirt roads of Penwell, Texas, criss cross overgrown lots littered with the detritus of a bygone oil boom that petered out in the 1940s. But as early as next summer, this ghost town 16 miles southwest of Odessa will become the site of a new coal power plant facility––funded in large part by taxpayers––that could play a major role in not only helping prolong the life of a dying coal industry, but in fueling an oil boom that’s just getting started in the Permian Basin region of West Texas.

The Texas Clean Energy Project (known as TCEP) is a proposed coal gasification plant that will generate electricity while attempting to capture 90 percent of the carbon dioxide emitted in the process. That’s according to Summit Power Group, the Seattle-based company behind the project.

TCEP is one of four U.S. power plants in the planning stages that would use Carbon Capture and Sequestration technology, which comes with an unproven track record and an exorbitant price tag for taxpayers…not to mention the impacts of mining the coal in the first place. A fifth such plant is already under construction in Mississippi.

Thu, 2014-02-13 10:56Ben Jervey
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St. Louis Judge Cites Citizens United to Protect Tax Breaks for Peabody Energy

With the quick stroke of a pen, a circuit court judge in St. Louis has singlehandedly silenced more than 22,000 city residents, who had sought to bring a ballot initiative to end tax breaks to fossil fuel companies to a citywide vote in April.

Last summer, volunteers with the Take Back St. Louis coalition gathered over 22,000 signatures to put onto the ballot a measure that would amend the city’s charter to include a “Sustainable Energy Policy” and end taxpayer-funded support of fossil fuel companies.

According to Take Back St. Louis, the “proposed charter amendment would end public financial incentives, such as tax abatements, to fossil fuel mining companies and those doing $1 million of business with them per year, and requires the city to create a sustainable energy plan for renewable energy and sustainability initiatives on city-owned vacant land.”

On Tuesday, Judge Robert Dierker sided with Peabody Energy (in a decision you can read here) to grant a temporary restraining order that would, in essence, keep the initiative off the April 8th ballot.

First declaring the initiative “facially unconstitutional,” Judge Dierker proceeded to cite the Citizens United decision in explaining why the policy would represent a “patent denial of equal protection” to fossil fuel energy companies.  Specifically, Judge Dierker wrote:

business entities (which, after all, are a species of associations of citizens coming together in the exercise of economic freedom) are entitled to constitutional protection as citizens and may not arbitrarily be denied basic legal rights. See Citizens United v. Federal Election Comm., 558 U.S. 310 (2010).

The proposed initiative and judge’s decision have implications far beyond the city of St. Louis. Peabody Energy, the largest privately-owned coal mining company in the world, is headquartered in St. Louis, and received tax breaks of over $61 million from the city in 2010. The Take Back St. Louis coalition was hoping to target future giveaways, arguing that the public funds would be much better spent on underfunded local services like schools.

Sun, 2014-02-02 11:45Ben Jervey
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No Matter How You Count Them, Fossil Fuel Subsidies Are As High As Ever

The exact worth of massive global fossil fuel subsidies is incredibly hard to figure. There’s no real consistency in the definitions of subsidies, or how they should be calculated. As a result, estimates of global subsidy support for fossil fuels vary widely.

According to a new analysis by the Worldwatch Institute, these estimates range from $523 billion to over $1.9 trillion, depending on what is considered a “subsidy” and how exactly they are tallied.

Worldwatch Institute research fellow Philipp Tagwerker, who authored the brief, explains:

The lack of a clear definition of “subsidy” makes it hard to compare the different methods used to value support for fossil fuels, but the varying approaches nevertheless illustrate global trends. Fossil fuel subsidies declined in 2009, increased in 2010, and then in 2011 reached almost the same level as in 2008. The decrease in subsidies was due almost entirely to fluctuations in fuel prices rather than to policy changes.

In other words, though the estimates vary widely, they all agree that fossil fuel subsidies are back up to the record levels they were at in 2008, before the financial crisis caused a temporary dip. So while world leaders, including President Obama, talk about ending subsidies that benefit one of the world's richest industries, there hasn't been any actual reduction. 

Tue, 2012-07-03 15:51Ben Jervey
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Bloomberg Stunner: How Chesapeake Energy Paid Less Than a 1% Tax Rate On $5.5 Billion in Profits

Chesapeake Energy, a company that is no stranger to financial scandals, has found itself on the front page of the financial papers again. This time, the subject is taxes. Or how Chesapeake barely pays them.  

Over its 23-year history, Chesapeake Energy, the second largest producer of natural gas in the U.S., and the company described by its founder and CEO Aubrey McClendon as “the biggest frackers in the world,” has earned roughly $5.5 billion in pre-tax profits. To date, the company has paid $53 million in taxes. That’s an effective tax rate of under 1 percent - a massive taxpayer subsidy.

The corporate income tax rate in the U.S. is 35 percent. 

The Bloomberg article that exposed these stunning figures is quick to note that this is far less than the 12 percent rate that GE paid in 2010 that caused such public outrage, and even a tiny percentage of the 18 percent effective rate that Google had to answer for.

So how does Chesapeake pull this off? Mostly, it’s due to a rule written in 1916 that allows oil and gas producers to, according to Bloomberg, “postpone income taxes in recognition of the inherent risk of drilling wells that may turn out to be dry.

The break may be outdated for companies such as Chesapeake, which, thanks to advances in technology, struck oil or gas in 99.6 percent of its wells last year.“ When the policy was written, drillers struck “dry wells” roughly 80 percent of the time.

Tue, 2012-06-19 11:40Brendan DeMelle
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Breaking: Leaked Rio+20 Earth Summit Final Agreed Text - Utterly Inadequate Response to Global Crises

DeSmogBlog has obtained the final negotiating text that will emerge from the Rio+20 Earth Summit and it is an utter disappointment to anyone who hoped that world leaders would pull together a meaningful global agreement on ending fossil fuel subsidies or other needed steps to protect future generations from resource depletion and global climate change.

Read the final text here: “The Future We Want”[.DOC] or [.PDF provided by DeSmog for those without Word]

Update: The Guardian (which first posted the text earlier today) has this summary of the implications:
  

Barring a last-minute rejection by one of the main negotiating blocks, the draft that will be presented to the 100 leaders attending the summit will contain almost no timetables, definitions or ways to monitor new sustainable development goals, nor will it strongly commit nations to move to a “green economy” that integrates environmental and social costs into decision-making.

Instead, civil society groups say the new text simply acknowledges the world's dire environmental and social problems without spelling out how to deal with them. 


Read the early reactions to the final text below from Greenpeace and WWF
  

Tue, 2012-04-24 15:52Steve Horn
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ALEC Launches Assault on Renewable Energy Industry

The American Legislative Exchange Council (ALEC), as covered previously by DeSmogBlog, is the “Trojan Horse” behind mandating that climate change denial (“skepticism,” or “balance,” in its words) be taught in K-12 classrooms.

Well, ALEC is at it again, it appears. Facing an IRS complaint filed by Common Cause, one of the leading advocacy groups working to expose the corporate-funded bill mill, ALEC has also launched an assault on renewable energy legislation, according to a well-documented report written by Bloomberg News.

The two developments are worth unpacking.

Common Cause IRS Complaint

The Washington Post reported that on April 23, Common Cause “had filed an IRS complaint accusing ALEC of masquerading as a public charity…while doing widespread lobbying.” 

ALEC is trying to brush aside this complaint, but Common Cause presents a compelling case.

It tells the IRS in its tax returns that it does no lobbying, yet it exists to pass profit-driven legislation in statehouses all over the country that benefits its corporate members,” said Bob Edgar, president of Common Cause, in a statement. “ALEC is not entitled to abuse its charitable tax status to lobby for private corporate interests, and stick the bill to the American taxpayer.”

Common Cause wants the IRS to complete a no-holds-barred audit of ALEC’s work and to examine whether it violated IRS laws. 

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