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Brian Peterson, Star Tribune

And the money goes to ... fossil fuels

  • Article by: JAY COGGINS
  • March 5, 2012 - 8:32 PM

Counterpoint

In "One's break is another's tax burden" (March 4), Jason Lewis treats us to another entertaining rant. This one is about the existential threat posed to our republic by -- wait for it -- nonprofits and their cushy tax breaks.

And what graver threat does the nonprofit realm unleash upon us than MinnPost, that media behemoth Lewis excoriates for being, um, nonprofit? And for accepting financial support from foundations! That are also nonprofit!

It's all very incestuous, you see, and very nonprofit.

Meanwhile, regarding subsidies flowing in oily rivers to our fossil-fuel industries, Lewis is dismissive. Without irony, while condemning MinnPost, he also condemns President Obama's penchant for complaining, incessantly we're told, about the evils of oil subsidies.

What's lacking here is a sense of proportion. Subsidies to fossil fuels, and the attendant environmental damage, are the real threat.

You might be tempted to believe that our government spends lavishly on green-energy sources relative to oil and coal and natural gas. Not a lot of people seem to understand by how much the facts run in the other direction.

Unfortunately for our planet and for our future, we continue to encourage financially the burning of fossil fuels and the emission of carbon dioxide.

Let's take a look at those energy subsidies. In a 2009 report, the Environmental Law Institute toted up the U.S. government's subsidies to all energy sources from 2002 to 2008.

The total going to fossil fuels: $72.5 billion. Of this, $54.2 billion came in the form of tax breaks and $16.3 billion in the form of grants and direct payments.

A mere $2.3 billion was spent on research into green fossil-based technology to capture and store the carbon dioxide that's released from burning coal.

Meanwhile, the total subsidy to all renewable energy sources was $28.9 billion. Of this, more than half ($16.8 billion) went to corn ethanol. Ethanol might reduce our reliance upon foreign oil, but it is no longer thought to reduce carbon emissions by much.

A more striking, and more sobering, report appeared in January of this year. Written by the International Energy Agency's chief economist, the report tallied worldwide government subsidies that promote the burning of fossil fuel.

These payments are truly staggering. In 2010 alone, more than $400 billion was spent, either directly or through tax breaks, to promote the burning of coal, oil and natural gas. Subsidies to renewable energy sources were barely one-sixth this amount.

The biggest offenders are the oil-rich developing countries. Iran's financial support for fossil fuels came to about $80 billion in 2010; Saudi Arabia's, above $40 billion. To be sure, America's contribution to the global annual total is much smaller. But we do our part, and it is high time we stopped.

The most sobering thing about the international subsidy totals is what they say about carbon-dioxide emissions and climate change. The IEA estimates by how much global emissions of carbon dioxide would fall if only all such subsidies were outlawed.

Their answer, in short, is that the elimination of fossil-fuel subsidies around the world, and the resulting reductions in energy consumption, would get us halfway to the goal of stabilizing atmospheric carbon dioxide at safe levels.

Long ago, my dad taught me a valuable precept: When you find yourself standing in a deep hole and holding a shovel, stop digging. I've learned over the years that following this advice pays off every time.

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Jay Coggins is an associate professor in the University of Minnesota's Department of Applied Economics. The views expressed here are his own and do not necessarily reflect the position of the university.

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