Despite Pledge to Phase out Fossil Fuels, the United States Still Spends $27 Billion a Year on Subsidizing Dirty Fuels
WASHINGTON –The United States continues to provide $27 billion each year to the production and consumption of fossil fuels, despite repeated pledges to phase out fossil fuel subsidies since 2009, new research has found.
In a major new study ranking G7 countries’ progress in meeting their pledge to phase-out fossil fuel subsidies by 2025, the U.S. ranked the worst among the countries with the world’s largest economies, which include France, Germany, Canada, Great Britain, Italy and Japan.
The research was conducted by experts at the Overseas Development Institute (ODI), Oil Change International (OCI), the International Institute for Sustainable Development (IISD), and the Natural Resources Defense Council (NRDC).
The study highlighted the Trump Administration’s recent backsliding from prior commitments to reduce fossil fuel subsidies, as well as the large amount of money the U.S. still spends to support oil and gas production.
The report “G7 fossil fuel subsidy scorecard” reveals the U.S. government spent $26 billion each year in 2015 and 2016 on fiscal support for fossil fuels, with $15 billion going to oil and gas production – the highest amount of any G7 country. A further $1 billion of public finance went to fossil fuel exploration.
Alex Doukas, Stop Funding Fossils Program Director at OCI, said: “The world is burning because of climate change, and by pushing for even more fossil fuel subsidies, the Trump Administration is throwing gasoline on the fire. The rest of the G7 must act on their commitment to end fossil fuel subsidies to demonstrate that, unlike Trump and his friends in the fossil fuel industry, they prioritize urgent action on climate change instead of handouts to dirty energy corporations.”
Han Chen, International Climate Advocate at NRDC said: “The U.S., and the world, needs to speed up a transition to a low-carbon economy, but this administration is rushing in the wrong direction, and trying to drag other countries down the road to more environmental harm. It’s trying to expand subsidized fossil fuel extraction from our public lands and waters at home, while trying to convince other countries like Japan to join their absurd pro-fossil fuels alliance. That’s just wrong, for everyone.”
Shelagh Whitley, head of the Climate and Energy Programme at ODI, said: “Until recently, the U.S. was one of the G7 governments leading the push for fossil fuel subsidy reform at the global level, but since 2017 the US government has actually increased support for fossil fuels.”
The study, published ahead of the G7 Summit in Canada, for the first time ranks each G7 country on their transparency, commitments and progress made on ending support for the production and use of oil, gas and coal.
Overall, the paper finds G7 governments are still providing at least $100 billion each year to support the production and consumption of oil, gas and coal despite repeated pledges to end fossil fuel subsidies by 2025, with the U.S. accounting for more than one-quarter of the support for fossil fuels out of the G7 countries.
Researchers found that in 2015 and 2016 G7 governments provided at least $81bn in fiscal support and $20bn in public finance for the production and consumption of fossil fuels at home and abroad.
The paper highlights several areas which led to a poor score for the U.S. government including:
- The decision to reverse a commitment to restrict public finance for coal-fired power plants.
- Tax breaks and loopholes for extraction of fossil fuels, especially from public lands.
- The U.S. is providing the highest total level of fiscal support for domestic oil and gas production across G7 countries, about $15 billion annually.
However, the U.S. scored well on transparency and, compared to other G7 countries, provided relatively limited fiscal support for fossil fuel consumption by transport, industry and households.
Ahead of the summit in Quebec, researchers have called on the G7 overall to:
- Publish comprehensive fossil fuel subsidy peer-reviews no later than 2019
- Establish country-level plans for phasing out fossil fuel subsidies, starting with subsidies that have negative social and environmental impacts
- Ensure subsidies for green energy transition do not support fossil fuels, and any remaining support prioritises vulnerable communities and households.
Notes to media:
The G7 Fossil Fuel Subsidy Scorecard, co-authored with the Overseas Development Institute (ODI), Oil Change International (OCI), and the International Institute for Sustainable Development (IISD) is here: https://www.odi.org/sites/odi.org.uk/files/resource-documents/12222.pdf
- The G7 2018 Summit will be held in Charlevoix, Quebec, from June 8 to 9
- The scorecard (Figure 1 in the report) uses seven indicators (based on 38 sub-indicators) to track G7 progress towards the phase out of fossil fuel subsidies:
- Indicator 1: Transparency
- Indicator 2: Pledges and commitments
- Indicators 3-7: Progress in ending support for: fossil fuel exploration; coal mining; oil and gas production; fossil fuel-based power; and fossil fuel use
- Each indicator was then scored out of 100 and each country ranked based on these scores
- The report found that in 2015 and 2016 G7 governments provided at least US$80.62bn in fiscal support and US$19.54bn in public finance
- The G7 and G20 have committed to phase out fossil fuel subsidies every year since 2009. At the 2016 Leader’s Summit in Japan a 2025 deadline was set for meeting this target
- The report tracks fossil fuel production and consumption subsidies referencing the World Trade Organization’s (WTO) definition of a subsidy which includes: 1) fiscal support (budgetary transfers and tax expenditures), and 2) public finance (grants, loans, equity infusions and guarantees).
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