As China and the U.S. announce a major climate deal—giving hope to environmentalists everywhere—we are also learning about the absurd amount of money world powers still give away to fossil fuel companies.
A new report from International Energy Agency says global oil, gas and coal subsidies totaled $550 billion last year. That dwarfs the new high of $121 billion for renewables, according to the International Energy Agency.
In other words, the value of fossil fuel subsidies are more than four-times greater than those of renewables.
That's about what it looks like in the U.S. too. CleanTechnica's Zachary Shahan has estimated that fossil fuel subsidies will cost more than $70 billion, compared with around $10 billion for renewables and less than $2 billion for carbon capture. Here's his chart:
This comes as the U.N. warns the world will have to eliminate all pure fossil fuel production (that is, production without carbon capture technology) by 2100 to forestall catastrophic climate change.
What kinds of subsidies are there? In countries where the economy is heavily reliant on oil and gas, like Russia and Middle Eastern nations, government makes direct payments to drilling companies to explore and extract hydrocarbons.
In other countries, like the U.S., the subsidies are more insidious — we often don't hear about them, because they've been around for awhile, and don't impact most people. But they're there, and they're large.
For example, the IRS actually has a depletion allowance that lets oil and gas royalty owners deduct 15 percent of the income they get from mineral interests. This tax break has been around for about a century, but it now costs about $1 billion annually.
Oil companies and investors are also able to write off their intangible drilling costs, including labor, fuel, chemicals, and hauling — 100 percent of which can be written off. The Joint Committee on Taxation (JCT) has estimated this tax break cost roughly $1 billion in 2013, and will amount to a $16 billion subsidy over the next decade.
Nor do they have to pay U.S. taxes when they claim they've already paid out royalties to a foreign government — what some call the "dual taxpayer reduction." These royalties are instead calculated as foreign taxes, and foreign taxes are fully deductible.
You may not know it, but oil companies are basically able to avoid paying royalty payments on most offshore oil drilling leases. This has been calculated as an $11 billion subsidy.
Finally, BP was able to deduct from its tax liability billions of dollars for costs related to remediation from its Gulf oil spill, setting a dangerous precedent for future accidents.
Here's a table showing what all this looks like, using data compiled by the Joint Committee on Taxation and the Center for a Responsible Federal Budget.
The Obama administration has attempted to cut the fossil fuel tax breaks, but they've failed miserably. Thanks in part to the fracking boom, the value of U.S. subsidies for fossil fuel exploration nearly doubled between 2009 (the year in which President Obama took office) and 2013, according to Oil Change International.
"The IEA says global renewable subsidies should "WILL"? climb to $230 billion in 2030. The EU remains the largest financial supporter of renewables to 2040, though the U.S. is a close second after 2035, the agency says.
The IEA also indicates that the value of fossil fuel subsidies should begin to decline, at least in the West and China, as energy demand growth slows, though it doesn't explicitly say how much less valuable they'll become.
So your fossil fuel friends may actually have a decent rebuttal: The value of their handout could soon start to decline. But only because their profits will too.
Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.