Between releasing new climate commitments under the Paris Agreement and organising an international Earth Day summit, it’s clear that U.S. President Joe Biden wants to reposition the country as an international climate leader. At a hearing on Thursday, 17-year-old Swedish climate activist Greta Thunberg offered him some advice on a way to do so: ending all subsidies to the dirty energy sector.
“I am not even going to explain why fossil fuel subsidies are bad,” she told U.S. lawmakers. “It is the year 2021. The fact we are still having this discussion and, even more, that we are still supporting fossil fuels directly or indirectly using taxpayer money is a disgrace. It is proof that we have not understood the climate emergency at all.”
Thunberg delivered her remarks at a historic virtual hearing held by the House Oversight Committee’s environmental subcommittee, convened by its chair Rep. Ro Khanna. The purpose of the hearing was to discuss phasing out financial subsidies to coal, oil, and gas, an idea which Biden said he supports in January.
In his recently released infrastructure plan, President Biden laid out a plan to eliminate some of these subsidies, totaling $US35 ($45) billion over the next decade. But that proposal focuses only on cutting tax breaks, which make up just a fraction of the subsidies that these industries receive.
As Thunberg said, leading climate scientists with the United Nations’ Intergovernmental Panel on Climate Change have said that in order to maintain a shot at meeting the goals of the Paris Climate Agreement, phasing out direct subsidies is an absolute necessity.
“Either you do this or you’re going to have to explain to your children and the most affected people why you are surrendering on the 1.5-degree target,” she said, referring to the goal of keeping the global temperature rise under 1.5 degrees Celsius (2.7 degrees Fahrenheit). “Giving up without even trying.”
Khanna is aiming to end other subsidies like direct expenditures by which the government gives companies money outright, and Master Limited Partnerships, a structure that gives companies lower taxes and to issue publicly traded stocks and bonds. He focused on five financial privileges in particular.
Energy lobbyists have long claimed (falsely) that fossil fuel subsidies do not actually exist. At the hearing, for instance, Frank Macchiarola, senior vice president of policy, economics, and regulatory affairs for the American Petroleum Institute, said that the financial benefits “are not subsidies, but rather, common tools that allow businesses to grow, invest, and create jobs.”
But the U.S. does indeed directly subsidise fossil fuel companies with billions of dollars in tax breaks, bailouts, and other financial privileges. Estimates peg the total value of these between $US10 ($13) billion to $US52 ($67) billion per year, and that’s not even including the $US10 ($13) to $US15 ($19) billion in direct pandemic relief the industry received from covid-19 stimulus bills last year. Despite the assertions from lobbyists like Macciarola (who later failed to answer basic questions about U.S. tax code when questioned by Khanna) that these measures create jobs, the industry laid workers off in droves even after accepting bailout packages.
If the U.S. continues to hand over these fortunes to the fossil fuel industry — one of the most polluting sectors that’s continued existence threatens to usher in impending climate catastrophe — Thunberg said the U.S. will signal that it’s only interested in rhetoric, not real change.
“You would send the message that you are not really taking it seriously, that you are talking very much but not really taking action,” she said in response to a question from Rep. Khanna. “We can talk as much as we want. As long as we don’t take real bold action right now to reduce emissions at the source, then it doesn’t really mean anything.
After four years of climate rollbacks under President Donald Trump, the U.S. will face an uphill battle in regaining legitimacy with international climate negotiators. Keeping its word about ending these subsidies would be one way it can show it’s serious about meeting the challenges of the climate crisis, especially because the U.S. pledged to eliminate fossil fuel subsidies back in 2016 at a meeting of the Group of Seven summit of the world’s richest nations. Yet as Thunberg also noted, this still wouldn’t be nearly sufficient to meet the scale of the climate emergency.
“This is just the very minimum amount of effort that is needed to start the rapid sustainable transition,” she said.
To really get off fossil fuels, more transformative change will be needed from the U.S. — and the proposals are out there. The End Polluter Welfare Act, which Sen. Bernie Sanders and Rep. Ilhan Omar last week and which Rep. Khanna signed onto, would go further than phasing out the subsidies discussed in the hearing and also end international financing for fossil fuels. Researchers have also called for an end to the tens of billions of dollars in implicit subsidies the federal government grants energy companies each year by letting them avoid paying the true cost of the pollution and health risks they cause. Those implicit subsidies essentially keep the industry afloat. To ensure the sector comes to a swift end while protecting the workers and communities who depend on it financially, some experts have called for the U.S. to bring the entire industry under national control and then phase it out in a planned way. These are all good ideas that the Biden administration hasn’t gotten behind.
But if it’s not going to take those more transformative steps, the least the administration could do is commit to comprehensively ending subsidies, and pressure Congress to get on board to do so, since it can’t do it all alone. That might not be a wholly sufficient step, but it’s a necessary one nonetheless if Biden is as serious about becoming a climate leader and meeting the goals of the Paris Agreement as he’s said he is.
“The simple fact is that if we are to live up to our promises and commitments in Paris, we have to end fossil fuel subsidies now,” said Thunberg.