OBAMA CALLS FOR END TO OLD ENERGY CHEAT

Obama wants worldwide end of fossil fuel subsidies
Seth Borenstein, September 23, 2009 (AP)

"President Barack Obama is calling on the world to end massive government subsidies that encourage the use of fossil fuels blamed for global warming…[He] will propose a gradual elimination, with the time frame to be determined…

"Mike Froman, Obama's national security adviser for economic affairs, said the main value of the proposal would be if it were multilateral. He declined to say if Obama was willing to go it alone…Many countries, including the United States, provide tax breaks and direct payments to help produce and use oil, coal, natural gas and other fuels that spew carbon dioxide, the chief greenhouse gas. Eliminating those would…[move the U.S. toward its] goal of cutting fossil fuel emissions in half by 2050…"

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"The costs of these subsidies are estimated in the tens of billions of dollars annually worldwide. In the U.S. alone, the federal government gave $72 billion in subsidies to the fossil fuel industry between 2002 and 2008, according to a study by the Environmental Law Institute…The subsidies encourage the burning of fuel that leads to global warming and other pollution, Froman said. Eliminating the subsidies would help slow global warming, reduce health problems from pollution, make the United States more energy-independent and foster economic growth…Environmentalists cheered the idea as a constructive use of free markets.

"The Organization for Economic Cooperation and Development said in a report last week that removing fossil fuel subsidies could reduce greenhouse gas emissions by more than 10 percent in 2050…The biggest energy subsidies in non-OECD countries are in China, India, Brazil and Russia…Twenty of the largest non-OECD countries spend more than $400 million in fossil fuel subsidies that could be spent elsewhere…In 2008, countries that subsidized fossil fuels increased their consumption by one million barrels of oil, while those that didn't reduced their consumption by about 1.5 million barrels…"

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"In the U.S. the biggest fossil fuel subsidies are tax breaks, the foreign tax credit and the credit for production of nonconventional fuels that add up to $29.4 billion over six years…While big oil companies make large profits, most American oil and natural gas producers are small and independent…[S]mall producers tap 90 percent of U.S. wells…[provide] about 20 percent of oil Americans use [and could be hurt by the subsidy cutoff]…Ending the subsidies could hurt development of crucial technology, such as carbon sequestration from coal plants, that is needed to fight global warming, said Frank Maisano, a Washington spokesman for coal utilities, oil refineries and wind developers. He said it also could hurt fuels that are homegrown…Administration officials said Obama's proposal would not affect subsidies for climate friendly development, like carbon sequestration from coal plants…"

[Frank O'Donnell, president, Clean Air Watch:] "[There is] no greater cause of climate change than fossil fuels. There's no greater cause of that than artificial subsidies. It's a great idea to eliminate those subsidies and let the marketplace work."