Fossil Fuel Subsidies

Why are NY Taxpayers Subsidizing Big Oil & Gas in this Day & Age?

/ Peter Bardaglio / Leave a comment

New York State currently subsidizes the fossil fuel industry by exempting it from paying $1.6 billion of Sales & Use Taxes and Petroleum Business Taxes every year. When I first learned of these subsidies, I was astonished. How could New York, which established some of the most aggressive targets in the nation for reducing greenhouse emissions in its climate law of 2019, still be handing out taxpayer dollars to businesses that continue to pump more of these emissions into the atmosphere?

Besides this obvious reason for taking a good, hard look at the subsidies, there are at least two more reasons why they no longer make any sense. First, the fossil fuel industry has been making enormous profits in recent years. In 2023, the global oil and gas industry earned a record income of more than $2.7 trillion, while they invested just 4% of capital expenditure on clean energy. Clearly, big oil and gas no longer need to be supported by these tax breaks, especially when they are turning around and investing so little in clean energy.

Second, New York passed the Climate Change Superfund Act last year in an effort to hold the fossil fuel industry accountable for the damage that its reckless business practices inflicted on the state. In other words, we are handing out subsidies to the same industry that we have just decided to impose stiff penalties on for its destructive behavior.

The Stop Climate Polluter Handouts Act (S3389/A7949), currently being considered by the state legislature, seeks to pull back on the incentives that benefit the most highly polluting fuels and their most unreasonable uses, including high-emission commercial airline fuel and low-grade shipping “bunker” fuel, the operation of fracked gas infrastructure, industry research and development, and more.

The bill targets fossil fuel corporations’ most egregious actions and protects ordinary New Yorkers by preserving some tax breaks that benefit the public such as the home heating credit for low and middle-income households and an agricultural exemption that helps small- to mid-sized farmers. In total, the legislation would end over $330 million in fossil fuel subsidies. At a time when Washington is taking steps to make huge cuts in the federal budget, cuts that would be extremely damaging to New York, the bill would also help to close the state’s budget deficit.

In short, the Stop Climate Polluter Handouts Act is a commonsense bill, raising revenue for the state while aligning state spending with New York’s 2018 climate law targets and holding fossil fuel companies accountable to pay the taxes from which they have been exempted for decades. There are only a few days left in this year’s legislative session, so time is running out. The legislature needs to move quickly to approve this measure and send it on to Gov. Hochul for her signature.

From Climate Crisis to Climate Chaos

/ Peter Bardaglio / Leave a comment

It’s been a record-shattering summer, and from the looks of it, we’re well on our way from climate crisis to climate chaos. Historic heat waves, wildfires, and floods have struck the U.S., Canada, Europe, China, and India, among other places. No doubt the return of El Niño has temporarily exacerbated the frequency and intensity of recent extreme weather events, but climate scientists are clear that the major factor at work is the continued burning of fossil fuels.

The world has not yet passed a tipping point into runaway climate change, say these scientists, but we’re getting closer. They warn that, as unnerving as this summer has been, even worse impacts are sure to come if we don’t move fast to reduce greenhouse gas emissions. “Climate science’s projections [have been] pretty robust over the last decades,” notes Professor Malte Meinshausen of the University of Melbourne in Australia in a Guardian interview from earlier this week. “Unfortunately, humanity’s stubbornness to spew out ever-higher amounts of greenhouse gases has also been pretty robust.


Flooding in Vermont, July 2023. Photo by Nicolas Erwin licensed under CC BY-NC-ND 2.0.

Hottest July Ever

The National Oceanic and Atmospheric Administration (NOAA) announced this month that July 2023 was the warmest July in its 174 years of recordkeeping, and the global surface temperature of the January-July period ranked as the third warmest ever. For the fourth consecutive month, global ocean surface temperatures hit a record high.

“The era of global warming has ended; the era of global boiling has arrived,” UN Secretary-General António Guterres declared last month. “Leaders must lead. No more hesitancy. No more excuses. No more waiting for others to move first. There is simply no more time for that.”

Climate Inequality

The disproportionate impact of climate destabilization has never been more evident. A report on climate inequality released by the World Inequality Lab (WIL) earlier this year found that the top 10% of the world’s carbon emitters were responsible for almost 50% of global greenhouse gas emissions, and the top 1% of global emitters generate more emissions than the entire bottom half. Agricultural productivity has declined by 30% in many low-income regions due to climate change, thus making poverty and food insecurity even worse.

The IPCC Sixth Assessment synthesis report issued in March concluded that climate change impacts are already more far-reaching and extreme than anticipated. Global warming of 1.1°C (1.98°F) has already set off unprecedented changes to Earth’s climate, and 3.3 billion to 3.6 billion people currently live in countries highly vulnerable to climate impacts. According to the report, the death toll from extreme weather disasters is 15 times as high in vulnerable nations as it is elsewhere.

A window still exists to avoid the worst impacts of climate change, the report points out, but it is a narrow one. To limit global warming to 1.5°C (2.7°F), greenhouse gas emissions need to peak before 2025 at the very latest, get cut in half by 2030, and reach net zero by 2050. The global consumption of coal must fall 95% by 2050, oil use must decline by 60%, and gas by about 45%. The annual investment in clean energy investment worldwide needs to increase between 3 and 6 times by 2030.

Fossil Fuel Subsidies

It’s in the context of these findings from NOAA, WIL, and the IPCC that an analysis of global fossil fuel subsidies from the International Monetary Fund (IMF) strikes with special force. Total subsidies for oil, gas, and coal in 2022 surged to a record $7 trillion (a rise of $2 trillion over two years), costing the equivalent of 7.1% of global gross domestic product.

As the IMF observes, that’s more than governments spend annually on education (4.3% of global income) and about two thirds of what they spend on healthcare (10.9%). Another way of putting these hard-to-swallow facts is that fossil fuels were subsidized in 2022 at the rate of $13 million a minute. The biggest subsidizers of fossil fuels were China, the U.S., Russia, the European Union, and India. The G20 nations cause 80% of global carbon emissions, yet they spent a record $1.4 trillion on fossil fuel subsidies in 2022.

The cognitive dissonance generated by the juxtaposition of recent extreme weather events, on the one hand, and the enormous undercharging of fossil fuel costs and their environmental impacts, on the other, could hardly be more head splitting. In the words of the IMF, scrapping fossil fuel subsidies “would prevent 1.6 million premature deaths annually, raise government revenues by $4.4 trillion, and put emissions on track toward reaching global warming targets.” To put it bluntly, ending these subsidies must be at the center of any effective climate solution.