Subsidizing Our Destruction
The Earth Policy Institute estimates that the world's governments subsidize environmentally destructive activities by $700 billion a year.
Iran provides an extreme example, providing $3.6 billion annually to keep oil prices low. The World Bank estimates that if this subsidy were phased out, it would cut Iran's carbon emissions by nearly half. Energy subsidies in Venezuela, Russia, India, and Indonesia increase carbon emissions between a tenth and a quarter. A study by the U.K. Green Party tabulated the subsidy to the country's airline industry at $391 per resident.
In the U.S., a 2002 study by Green Scissors, a coalition of environmental groups, calculated that subsidies for the energy industry totaled $33 billion over 10 years, with the oil and gas industry getting $26 billion, coal $3 billion and nuclear $4 billion. In 1999, Donald Lubick, U.S. Treasury Assistant Secretary for Tax Policy, claimed that the oil and gas industry "probably has a larger tax incentive relative to its size than any other industry in the country." A 2001 study by Redefining Progress showed that U.S. taxpayers were subsidizing auto use by $257 billion a year.
A few countries have started reducing their carbon subsidies. Belgium, France and Japan have phased out all subsidies for coal. Germany cut its coal subsidy inhalf between 1989 and 2002, lowering its coal use by 46%. China cut its coal subsidy by two thirds from 1993 to 1995, and more recently put a tax on high sulfur coals.
But these few examples are an inadequate beginning for a world faced with much sooner than expected global warming effects. These huge carbon subsidies must be transformed into subsidies for renewable energy and a sustainable economy. Only then will we begin to make progress in our efforts to ward off environmental catastrophe.