Our Perspectives on the Latest Issues
PennFuture has published the third edition of a Fossil Fuel Subsidy report that first appeared in 2011. The 2021 version is entitled “Buried Out of Sight: Uncovering Pennsylvania’s Hidden Fossil Fuel Subsidies."
Our report reveals that Pennsylvania’s fossil fuel subsidies total $3.8 billion, with 52 percent of that amount benefitting fracked gas and petrochemicals. At a time of a climate emergency, pandemic, racial reckoning and an economic downturn that somehow is building extravagant wealth for billionaires while others struggle to make rent and buy food, the inequity and cronyism behind these subsidies strikes one as especially appalling.
The report is having an impact.
We’ve heard from many throughout the state who are dismayed over the findings, but who are glad the information is seeing the light of day. They are reacting most to the figure that when spread across all residents of Pennsylvania, these subsidies amount to $296 per person living here.
Boosters of fracking, petrochemicals and plastics want to keep this information hidden from the public.
The report has hit a nerve over at Frack Central—the cabal of trade associations and companies that coordinate their advocacy to protect these subsidies—whose public relations machine is churning out messages accusing our meticulously researched report as sloppy. They falsely argue that our commonsense recommendations to have polluters pay their fair share to do business in our state is the equivalent of calling for your taxes to be increased.
Organizers of Frack Central, like the Marcellus Shale Coalition, are singularly focused on attacking the report. This includes their lazy messaging that distorts and simplifies our very sophisticated analysis.
Our most basic recommendation is that state agencies be charged with transparency and that they make subsidy information publicly available on a regular basis.
These distortions by industry spin doctors will not be an effective rebuttal of our report’s analysis and our daylighting of the facts and figures that make up the tangled and hidden truth behind these $3.8 million in subsidies. Frack Central’s smear campaign has traction, though, when it gets amplified by its friends in the legislature, and elsewhere, and this is happening.
I invite you to review the dense report, with an eye to the chart on page 4. There, you can see for yourself the long list of offending exemptions from taxes that the rest of us are subject to, and that can produce tax revenues, including for local governments and services.
The fact is the financial largesse of subsidies shown to the fossil fuel industry is hurting our state’s bottom line. Let’s remember these subsidies are provided with the blessing of many state elected officials, and the Governor, who are often at odds with each other on the topic of how to generate much needed new revenues in our state. So why make the money matter worse through these goodies to the fossil fuel industry?
The fact is that these subsidies are robbing our state of $2 billion annually in foregone revenues. If the majority of subsidies could be abolished, we can level the playing field between frackers and fossils, and pretty much everyone else including taxpayers, small businesses and other less-favored business sectors who have many fewer lobbyists in Harrisburg pleading their case.
The time has come for the fossil fuel industry to pay its fair share and its most egregious subsidies terminated. This includes paying even the most basic taxes from which frackers and crackers are exempted, namely paying property taxes.
Lastly, since PennFuture’s report is based on the most recently available information from 2019, it discusses, but does not calculate, the financial impacts and lost revenues associated with two recent subsidies directed toward petrochemical development.
First is the subsidy package totaling $1.6 billion in grants, tax exemptions and other programs offered to Royal Dutch Shell for its ethane cracker in Beaver County. According to Good Jobs First Subsidy Tracker, Shell ranks seventh among the companies that have generated the most public subsidies in the United States, totaling more than $2.04 billion, with other support also coming from places like Louisiana and Texas. The $1.65 billion package Pennsylvania offered Shell is over 15 times the size of the next largest corporate subsidy offered here. The second largest was a $100 million package granted to Volkswagen in the late 1970s for a manufacturing plant in Westmoreland County. The 2.8-million-square foot plant is now closed.
Second are the subsidies recently approved in July 2020 (House Bill 732) for petrochemical facilities. This legislation includes tax credits – in place for 26 years and adding up to over $693 million in foregone tax revenue – and is made available for up to four facilities that manufacture only petrochemicals and fertilizers using fracked gas.
In other words, in a couple of years it’s very possible Pennsylvania’s fossil fuel subsidy package will balloon from $3.7 billion to almost $6 billion. Yet, Pennsylvania legislators argue nearly every spring about Pennsylvania’s budget deficit or high taxes when one of the reasons for these perpetual challenges is their own doing.
PennFuture hopes that by bringing sunlight to this growing subsidy problem in Pennsylvania, better policy making can happen in the future. The perpetual cycle of subsidies, boom, and bust fossil fuel industries is a detriment to the Commonwealth. Breaking this feedback loop is one of the keys to a better future.
For more, read this piece by Rob Altenburg, Director of PennFuture’s Energy Center, and co-author of the Fossil Fuels Subsidies report.