Subsidies for the fossil fuel industry date back as long as a century ago, at a time when the United States relied on cheap and abundant fossil energy to fuel its unparalleled economic growth. The issue today is many of those subsidies still exist at an increasing price tag when they are no longer necessary and potentially harmful, according to research by the Environmental and Energy Study Institute (EESI).
Released last year, EESI research puts current U.S. direct subsidies to the fossil fuel industry at roughly $20 billion per year, with 20 percent allocated to coal and 80 percent to natural gas and crude oil. With today’s fossil fuel industry mature and profitable, these funds could instead be directed to a renewable fuel industry that better addresses our environmental goals, according to EESI Executive Director Daniel Bresette.
A common misconception about the renewable fuel industry, specifically ethanol, is that it is heavily subsidized. In comparison to today’s fossil fuel industry, Bresette said there is really no comparison.
“While I appreciate that there is criticism of subsidies in general, there isn’t a fair comparison when we are talking about support of the fossil fuel industry,” he said.
Both oil and ethanol have been hit hard by the COVID-19 pandemic, and both industries will take considerable time to recover. On the other side of the recovery, Bresette would like to see policy makers take a look at how we use subsidies, specifically how the government can use those funds to build an energy sector that helps reduce greenhouse gas emissions.
According to the U.S. Department of Agriculture, ethanol helps reduce greenhouse gas emissions by 39-43 percent compared to gasoline.
“We think we can do better,” Bresette said. “We are all certain there is more we can do to really improve public health with respect to liquid fuels. I think it is tricky right now, and it will be a difficult transition to move from the way things are done to the way they ought to be.”
In addition to its environmental benefits, Bresette said EESI has also done considerable research on the economic benefits of a strong renewable fuels sector to rural America. Greater Minnesota, for example, is home to 18 ethanol plants.
“We traditionally see biofuels as a win-win,” Bresette said. “It promotes public health with its aromatic benefits and as an industry it supports rural communities.”