Decades of incentives to the fossil fuel industry have polluted our air and water and left us on the brink of a climate crisis. These subsidies also lead to windfall profits for some of the largest and most polluting multi-national corporations, and that are responsible for human rights abuses and the survival of brutal and dictatorial governments.
Subsidies for fossil fuels comes in many forms. Friends of the Earth has identified over $30 billion in tax breaks that the U.S. government gives in subsidies to fossil fuels. The U.S. government also subsidizes fossil fuels through loan guarantee programs such as the ones run by the Department of Energy and the rural utility service. Federal export credit agencies such as the US Export-Import Bank (Ex-Im) and the Overseas Private Investment Corporation (OPIC) provide significant levels of taxpayer-supported financing for fossil fuels. Finally, the World Bank and other large development financiers supported by the U.S. continue to fund dirty energy projects in developing countries across the world.
In June 2008 Friends of the Earth released a report, identifying $32.9 billion in oil subsidies that are going to the oil and gas industry. In March, President Obama released a budget that eliminates most of the subsidies that Friends of the Earth identified starting in 2010 and would save taxpayers over $30 billion. In order for these tax breaks to be eliminated, Congress must pass legislation to remove them.
Friends of the Earth has consistently called for the U.S. Export-Import Bank (Ex-Im) and the Overseas Private Investment Corporation (OPIC) to phase out lending for fossil fuel-related transactions. However, both have refused to end fossil fuel lending. In FY’ 08 Ex-Im bank authorized $1.6 billion for fossil fuels projects and it appears that Ex-Im bank financing for fossil fuel related deals will increase sharply (Pacific Environment). The Overseas Private Investment Corporation (OPIC) also continues to fund fossil fuel projects, although on a smaller scale. In 2008, OPIC authorized at least $202 million for fossil fuels (Oil Change International).
In 2002, Friends of the Earth and others filed a lawsuit against Ex-Im and OPIC for providing financial assistance to fossil fuel projects without first evaluating their global warming impacts. The lawsuit was settled and Ex-Im currently is negotiating with Friends of the Earth and other organizations to develop a carbon policy, which would govern Ex-Im financing for projects and companies which produce significant greenhouse-gas emissions. The lending from Ex-Im and OPIC is under the control of the administration, and so subsidies going for fossil fuels from these institutions could be quickly ended.
The World Bank and regional development banks have historically funded, and continue to be some of the largest and most consistent funders of fossil fuel projects. The World Bank’s fossil fuel lending continues to rise, increasing investments by nearly $2 billion in 2008 to $3.8 billion dollars (Bank Information Center). Fossil fuel lending increased by 94 percent from 2007 to 2008. Amazingly, funding for coal –- the dirtiest of fossil fuels –- increased by 256 percent during that time. The Bank’s continued funding for fossil fuels while re-branding itself as a climate-friendly institution is highly hypocritical. The administration has a say over U.S. lending to the multilateral development banks, and could send a strong signal to these institutions by ending U.S. funding for fossil fuels.
