New Study by EarthTrack: State-Level Fossil Fuel Subsidies Amount to Billions of Dollars per Year

Posted By Lowell F. on December 17th, 2012

We’ve spent a lot of time here discussing subsidies to the fossil fuel industry at the federal level. We’ve also touched on how individual states add their own layer of subsidies to an already wealthy industry.  A systematic accounting for all fossil fuel subsidies at the state level has been extremely difficult to come by. That’s why we’re so please to see that the experts at EarthTrack are out with a detailed, new study on this very issue, focusing on five major energy-producing states: Colorado, Kentucky, Louisiana, Oklahoma and Wyoming.  Here are a few key findings, but definitely check out the entire study, which is excellent.

  • “There are thousands of subsidies at the state, provincial or local levels as well, but they are largely untracked.”
  • “The dollars associated with individual sub-national subsidies are usually smaller than national-level programs. In the aggregate, however, sub-national subsidies transfer billions of dollars to fossil fuel industries just like their federal counter-parts. There is a great deal of money at play here.”
  • Subsidy mechanisms at the state level include “grants…tax breaks, loan guarantees, liability caps, purchase mandates, and below-market sales of resources.”
  • In addition, “Many governments also build and maintain roads related to energy production, or are left cleaning up and reclaiming fossil fuel sites where the original owner did not do so properly. Infrastructure, oversight, and reclamation expenditures are often spread across many different state agencies, making total spending difficult to measure.”
  • Yet another form of state-level subsidization is that “[f]ossil fuel consumption is routinely exempted from state sales and use taxes for most users.” Also, states often “reduced severance taxes in order to bolster lower-quality sources of supply or to increase in-state demand for a particular fuel.”
  • Oil, natural gas, and coal industries have proven highly successful in accessing more general subsidies to capital, financing, job creation, and infrastructure support, adding this funding to a wide array of fossil fuel-specific support.”
  • “This review clearly demonstrates the need for greater transparency and more systematic valuation rules for sub-national subsidies to fossil fuels.”
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