Every year, G20 governments spend $584 billion supporting the fossil fuels industry through “budgetary transfers and tax expenditure, price support, public finance, and SOE investment for the production and consumption of fossil fuels at home and abroad,” according to a report published last year by the International Institute for Sustainable Development (IISD).
The G20, or Group of 20, is an intergovernmental forum of 20 key players in the global economy (including 19 countries and the European Union), as part of a post-World War II effort to shape global economic policy. With this directive in mind, the spending decisions of these 20 governmental bodies has an outsized importance and influence in worldwide economic trends, and the decision to continue to support fossil fuels to the tune of half a trillion dollars speaks volumes about world leaders’ commitment (or lack thereof) to combating climate change.
While the amount of fossil fuel subsidies had been waning in recent years, the Covid-19 pandemic brough support for the oil and gas sector roaring back to life. “G20 countries allocated some $170 billion in public money commitments to fossil fuel-intensive sectors in response to the COVID-19 crisis between January 1 and August 12, 2020,” the IISD reports in a statement that they say is likely an underestimate. “The support for fossil fuels in response to the COVID-19 crisis indicates that G20 governments are moving in the wrong direction and are likely to undo the little progress made between 2014 and 2019,” the report continues.
Now, however, the global development agenda seems to be changing, and world leaders appear to be more earnestly on board with curbing emissions than ever before. In the United States, President Joe Biden won the election on a platform that featured climate challenges as a central issue. Getting green energy initiatives through Congress, however, has been far easier said than done.
While the infrastructure and spending bills have spent months oozing their way through the nation’s paralyzingly partisan bureaucracy, it’s looking like they might finally get passed on Tuesday. Part of the hold-up has been that progressives in the Democratic party have been holding back the bills in order to make sure that they are not gutted on their way through the House and the Senate. One of the portions of the infrastructure bill that is up for debate is the resurrection of a tax from the 80s which is aimed at getting the chemical and petroleum industries to pony up to pay for the environmental damages caused by these sectors.
The bill would revive the “superfund tax” that was previously instated in 1980, but which expired in 1995. These taxes are based on the commonly accepted “polluter pays” principle and are used to cleanup toxic waste sites. “The taxes are meant to shift at least some of the cleanup costs from general taxpayers to the polluting industries,” writes the Greater Baton Rouge Business report in a recent article, “though industry leaders fear the taxes will make them less competitive internationally.” The tax would be per unit, not tied to cost, so that oil market volatility would not alter the bottom line.
The excise tax would target 42 hazardous substances such as benzene and chlorine. These measures are expected to generate $14.4 billion over the next 10 years. Interestingly, the push to reinstate superfund taxes did not start with the infrastructure bill, but has never stopped since 1995, when the original bill was allowed to lapse. The inclusion of the revival in this bill was largely thanks to Republican senators who were desperately searching for any way to insert “pay-fors” into the legislation, and the measure has amazingly bi-partisan backing.
By Haley Zaremba for Oilprice.com
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