February 1, 2017
The $200 Billion Fossil Fuel Subsidy You've Never Heard Of
While the Trump Administration is ignoring climate change, its costs are real. The US emitted 5.4 billion tons of CO2 in 2015, with a cost per ton of $36. That means, in effect, the U.S. is paying a $200 billion hidden subsidy to the fossil fuel industry.
By Amir Jinavia Forbes
There’s an “alternative fact” that has been prevailing in society. That is that climate change is not happening, or at least not happening due to humans. This view has held strong even though billions of people around the world—including right here in the U.S.—are already experiencing the damaging, costly, and dangerous effects of a changing climate. In the past week, the Trump administration has put this “alternative fact” front and center—taking actions to wipe government websites clean of the words “climate change,” walk back environmental rules, and limit the effectiveness of the EPA. These are the signs of an administration that is not only hostile towards climate change, but towards science itself.
Now for an actual fact: The costs of climate change are real. Scientists and economists, myself included, may go back and forth on how high the actual cost is, but it is definitely greater than zero. This cost can be summarized by an important number called the Social Cost of Carbon—the cost to society of emitting an extra ton of carbon dioxide into the atmosphere. That cost reveals itself in different ways. For example, rising temperatures will lead to more heat-related deaths, and less time in the labor market (more on that in my previous Forbes post).
The U.S. emitted 5.4 billion tons of carbon dioxide in 2015, with a cost per ton of $36 (the current Social Cost of Carbon). That means the U.S. is paying $200 billion to cover the costs of all the emissions being burned. In effect, it’s a $200 billion hidden subsidy to the fossil fuel industry. This $200 billion is a cost in real money—in lost labor productivity, healthcare costs, increased energy expenditures, coastal damages—that is paid somewhere in the world for each ton of carbon dioxide that is emitted.
The Trump administration has argued that fossil fuels are not on an equal playing field due to “job-destroying regulations.” They’re right about one thing—the playing field is not equal. Numbers on the exact direct fossil fuel subsidies in the U.S. vary, but it’s probably on the order of $20 billion being handed out to the fossil fuel industry each year. That’s on top of the $200 billion hidden subsidy they’re already getting for polluting our air and contributing to climate change...