ANNAPOLIS, Md. -- As Washington grapples with rebooting the nation's tax code, a new report makes a compelling argument for eliminating tax breaks for the fossil fuel industry.

Peter Erickson, senior scientist and the study's lead author, said market forces - such as current oil prices - would prevent industry from tapping reserves that scientists warn need to stay in the ground to prevent the most catastrophic impacts of climate change. But taxpayer-funded subsidies are tilting the scale in favor of more drilling.

"Just these subsidies that we looked at would bring on about 6 (billion) or 7 billion tons of CO2,” Erickson said. "That's about 20 percent of all the oil that we could produce between now and 2050."

The study, by the Stockholm Environment Institute and Earth Track, found nearly half of all known U.S. oil reserves are dependent on subsidies. Erickson explained pollution from those reserves would put a big dent in the nation's carbon budget - the total amount of fuel that can be burned while keeping global temperatures below dangerous levels.

Industry groups have argued that tax breaks are necessary to keep and create jobs.

Researchers found that when oil prices are down, tax breaks prop up returns for investors. And Erickson said when prices go up, the subsidies flow directly into a company's overall profits.

"These dollars are not going to greater wages or to greater jobs,” he said. "Most of the value of these subsidies goes directly to corporate profits, over and above what they already need in order to employ people on the ground."

Erickson said tax breaks could be used to create jobs in industries with better long-term prospects. He pointed to last week's announcement by General Motors that they would be moving to 100 percent electric vehicles, and China's decision to ban cars that use diesel.

"The way we structure our tax code really reflects our priorities as a country,” Erickson said. "Are we going to subsidize things that give us a better future, or are we going to subsidize the old industries that are creating lots of pollution?"

The prospect for cutting subsidies remains uncertain. A separate report by Oil Change International found that in the 2015-2016 election cycle, oil, gas and coal companies invested $354 million in campaign contributions and lobbying, and got nearly $30 billion in federal subsidies - a return of more than 8,000 percent.



get more stories like this via email

A round of public testimony wrapped up this week as part of renewed efforts by a company seeking permit approval in North Dakota for an underground pipeline carrying carbon emissions. Economic benefits were again touted but the plan still has opponents.

Last year, North Dakota's Public Service Commission denied a permit request from Summit Carbon Solutions, which wants to build a maze of pipelines in several Midwestern states. Emissions from ethanol plants would be captured for underground storage in North Dakota.

Skott Skokos, executive director of the Dakota Resource Council, said they remain unconvinced it would be a worthwhile project.

"It felt like déjà vu," Skokos observed. "I don't think Summit did anything to relax the concerns of the public."

Company officials have submitted a new application with a revised route as they try to ease concerns about safety and landowner rights. During comment periods, Summit leaders and other speakers discussed how the project would provide economic boosts, including corn prices. However, skeptics restated their concerns about potential ruptures and lasting negative effects on the landscape.

Skokos pointed out large carbon-capture projects like these have yet to prove themselves, noting smaller initiatives are not as likely to rile up opponents. He pointed to the Red Trail ethanol plant in North Dakota.

"They're storing it, basically, almost on-site, next to the facility and they're not affecting a bunch of landowners in the process," Skokos emphasized.

The Summit regulatory case has two upcoming public hearings in North Dakota, one scheduled for May 24 and the other on June 4. The company has run into similar opposition and permitting headwinds in other states, including South Dakota.

Leaders concerned about pollution and climate change are raising awareness about a ballot measure this fall on whether the state should mandate buffer zones around new oil and gas wells.

Voters will be asked to uphold or revoke Senate Bill 1173, which would require a 3,200-foot setback around any new well near schools, neighborhoods and hospitals.

Meghan Sahli-Wells, former mayor of Culver City and a leader with the group Elected Officials to Protect America, fought to phase out the Inglewood oil field and said no community should be a sacrifice zone.

"A study from Harvard found that in California, 34,000 people died in 2018, prematurely, from fossil fuel air pollution," Sahli-Wells pointed out. "These figures are three times higher than other studies."

The Stop the Energy Shutdown campaign, supported by the California Independent Petroleum Association, opposes the setback rule, arguing it could constrict local supply and cost jobs in the industry. A court put the bill on hold pending the outcome of the November election. A "yes" vote would keep the setbacks. A "no" vote would rescind them.

Clean energy advocates are also speaking out against companies operating older low-producing wells rather than pay to shut them down and seal them up properly.

Ahmad Zahra, a city council member in Fullerton, said Assembly Bill 2716 would incentivize their closure by charging companies $10,000 a day to operate so-called "stripper wells."

"We have over 40,000 oil wells currently sitting orphaned or idle, leaking methane and volatile organic compounds into the air, water and soil," Zahra emphasized.

Other states are following California's lead. Rep. Debbie Sariñana, D-Albuquerque, New Mexico, is sponsoring a bill to require setbacks near sensitive locations since more than 32,000 children in the state attend school within a mile of an oil and gas extraction site.

"Over 80 schools in northwestern New Mexico - the San Juan Basin and southeastern New Mexico, the Permian Basin - are within one mile of an oil and gas well," Sariñana noted. "Some schools are surrounded by dozens and even hundreds of wells within a single mile."

The construction of more solar farms in the U.S. has been contentious but a new survey shows their size makes a difference in whether solar projects are favored by neighbors.

South Dakota's largest solar installation, the Wild Springs project in New Underwood, began operations in March and covers more than 1.5 square miles. The survey showed projects under 100 megawatts are generally favored by neighbors, while larger ones like Wild Springs are unpopular.

Kristi Pritzkau, finance officer for the City of New Underwood, said the construction traffic was tough on the town of just over 600 but the project's builder, National Grid Renewables, is giving back to the community.

"They had to use our well, so they paid for the water, and they paid for a new pump for it, too," Pritzkau pointed out. "They've been really great with the city."

Prtizkau noted the company donated to the town's pool and Lions Club and has created a school scholarship program, all part of the more than $500,000 of charitable giving it has promised in the project's first 20 years of operation. It is also expected to bring in $12 million of tax revenue to the county in the same time frame.

Sioux Falls-based Missouri River Energy Services has plans to build a new solar project near Brookings and build a transmission line from South Dakota into Minnesota.

Tim Blodgett, vice president of member services and communications for the company, said federal grant programs and tax credits provide incentives and South Dakota produces more energy than it can use.

"With the development of more wind, the development of solar, there's a lot planned right now to get these resources out of this area," Blodgett explained. "Into Minneapolis and other places where there's larger demand for the energy."

Currently, more than half the state's power generation comes from wind, followed by hydropower.


get more stories like this via email