Examining claims of fossil fuel subsidies
When the topic of wind and solar energy subsidies comes up it is often claimed that subsidies are justified because fossil fuels are subsidized at much higher rates, so it is worth examining the basis of these claims.
The depletion allowance has long been cited as a giveaway to the fossil fuel industry, but every business gets to depreciate its capital investment. It’s just that oil, gas and mining companies get to do it based on percentage depletion of the resource rather than by some other method.
Others of these “subsidies” are very broadly defined. For example, The Rocky Mountain Institute includes, in part, “the military costs of forces whose primary mission is intervention in the Persian Gulf” as a subsidy to the fossil fuel industry.
An International Monetary Fund report on fossil fuel subsidies tallies the amount at $5.3 trillion globally in 2015. Most of this total arises from countries setting energy taxes below levels that fully reflect the environmental damage associated with energy consumption; so, even if the costs they claim are accurate, they are subsidies to consumers, not to fossil fuel companies.
Even so, the IMF’s figures are misleading. First, the claim of environmental damage resulting in higher health care costs has nothing to do with carbon dioxide (CO2) emissions. CO2 is essential plant food, and is not a health hazard. These claims have to do with mercury, sulfate or other emissions, which have been greatly reduced in our own country since passage of The Clean Air Act. But, a big problem with those estimates, as pointed out by Dr. Alan Carlin in his critique of the Environmental Protection Agency’s CO2 endangerment finding, is that they use the linear, no threshold assumption in calculating health effects. That assumption basically asserts that if 100 aspirin is a fatal dose, then of 100 people take one aspirin, one of them will die.
Other groups include losses due to extreme weather as subsidies to the fossil fuel industry. However, these costs are speculative. IPCC author Laurens Bouwer, in a study published in the Journal of the American Meteorological Society in 2011, states that increased losses are due to increased development and the increased value of property at risk.
In 2014, Warren Buffett claimed that climate change has not affected Berkshire Hathaway’s insurance business, and they have not changed the way they estimate losses. Meanwhile, Munich Re is making record profits through higher premiums by exaggerating the dangers of climate change.
• Fred Hubler of Cedar Rapids is retired from Rockwell Collins after three decades as an electrical engineer. Comments: email@example.com