Decades of incentives to environmentally damaging industries have polluted our air and water and left us on the brink of a climate crisis. Some of these subsidies also lead to windfall profits for the largest and most polluting corporations -- corporations which unsurprisingly are also generous political donors. Polluter subsidies come in many forms, from tax breaks and incentives that benefit entire industries, to direct financing for specific projects.
Since 1994, Friends of the Earth has sought to identify and eliminate environmentally harmful spending and subsidies in the U.S. tax code and budget. Our flagship Green Scissors campaign has eliminated $26 billion in ecologically damaging and wasteful tax breaks and spending.
Currently, one of our Green Scissors priorities is to end wasteful subsidies to the ethanol industry, particularly the Volumetric Ethanol Excise Tax Credit (VEETC) -- a $6 billion giveaway to oil companies and Big Corn. In June 2011, the Senate voted to end VEETC, major victory that came after years of effort. Another key Green Scissors priority is to end fossil fuel subsidies. 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 2009, President Obama released a budget that eliminates most of the subsidies that Friends of the Earth identified, and would save taxpayers over $30 billion. Subsequent budgets proposed by Obama have also included these cuts, but in order for these tax breaks to be eliminated, Congress must pass legislation to remove them.
In addition to tax breaks and incentives, the federal government also provides direct financing for environmentally harmful public infrasturcture, such as sprawl-inducing highways and dams that put endangered fish species at risk. Other financing programs are designed to support companies in their efforts to develop financially shaky and ecologically damaging projects. For example, the Department of Energy Loan Guarantee program put taxpayers on the hook if risky nuclear power companies don't make enough money to pay back their loans to Wall Street banks. The program also funds projects such as the controversial Medicine Bow coal to liquids plant, one of the first attempts in the U.S. to commercially convert coal to gasoline.
The U.S. Export-Import Bank (Ex-Im) and the Overseas Private Investment Corporation (OPIC) both provide financing to U.S. companies to do business abroad. Friends of the Earth has consistently called on these agencies to phase out lending for fossil fuel-related transactions. However, both have refused; 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 U.S. also provides funding for multilateral development banks such as the World Bank. Although the World Bank is supposed to help alleviate poverty and promote sustainable development in poor countries, it continues to be one of largest and most consistent funders of fossil fuel projects, such as the Medupi coal project in South Africa. This lending threatens to lock countries into a high-carbon development path for decades to come. The World Bank’s fossil fuel lending went up 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. Hypocritically, the Bank is attempting to re-branding itself as a climate-friendly institution. The White House 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.