Why are we still subsidizing the fossil fuel industry?
As of July 2014, Oil Change International estimates U.S. fossil fuel subsidies at $37.5 billion annually, including $21 billion in production and exploration subsidies.
Other credible estimates of annual United States fossil fuel subsidies range from $10 billion to $52 billion annually – yet none of these include costs borne by taxpayers related to the climate, local environmental, and health impacts of the fossil fuel industry.
Fossil fuel subsidies in the U.S. also include massive military expenditures to acquire and defend fossil fuel interests around the globe, and infrastructure spending and related maintenance based on an antiquated energy system built on large, remote power plants and cheap electricity. Coal costs the U.S. $500 billion per year in health, economic, and environmental damage.
Today, we have much cleaner and economically viable sources of energy. Solar and wind power change the energy equation in the same way that digital cameras changed the film camera equation.
After you build a solar rooftop installation, the marginal cost of each additional unit of energy drops to zero because the sun and wind are free. Clean energy is about increasing returns on your investments. Fossil fuel industries are about decreasing returns. The more you pump, the less each well produces. The more you pump, the more each unit of energy will cost in the future. Unsubsidized solar is already cheaper than subsidized fossil fuels and nuclear power in hundreds of markets around the world.
Of course, the sun doesn’t always shine and the wind doesn’t always blow. Electric utilities deal with reliability problems constantly. When a large, 1,000-megawatt coal or nuclear plant goes down, there is a massive struggle to get backup power online to cover the loss. When the load goes down, they scramble to find places to dump the power as these large units are relatively inflexible. Having numerous small generators, spread over large areas, significantly reduces the impact of outages.
President Trump’s assaults on the EPA and environmental regulations are smokescreens for more subsidies to the fossil fuel industry. This will not make America great again. It will bankrupt the economy and leave the future to those that follow the economics of clean energy.
– Dan Streiffert