Lawmakers can save $2 billion if they stop subsidizing the fossil fuel industry in Pennsylvania | Opinion
If our elected leaders had a chance to inject $2 billion back into Pennsylvania’s annual budget, why wouldn’t they?
Budget negotiations will soon ramp up into high gear in Harrisburg now that Gov. Tom Wolf has released his annual proposal. With a multi-billion dollar budget shortfall, there is one simple solution that has been deferred for far too long: eliminating the worst of our state’s fossil fuel subsidies, and recapturing $2 billion worth of lost revenues.
Despite this obvious solution, advocates remain wary. We know too well that fossil fuel interests have benefitted from a system in which several million dollars in lobbying and political contributions one year buys billions of dollars worth of subsidies in the years to come.
This isn’t a blithe statement. After months of research and analyses, a new PennFuture report reveals that Pennsylvania provided $3.8 billion in fossil fuel subsidies in Fiscal Year 2019. This makes Pennsylvania one of the largest corporate subsidizers in a country that is the second largest fossil fuel subsidizer in the world.
The scale of Pennsylvania’s fossil fuel subsidies cannot be overstated, and neither should their impact. These subsidies distort our economy in favor of an industry that degrades the environment, threatens public health, and destabilizes the climate, all while robbing our state and local governments of resources to pursue core functions including, ironically, the regulation of fossil fuel companies.
Money that could have funded our local governments and schools as they grapple with unprecedented challenges, or funded much needed infrastructure improvements, instead pads the profits of corporate executives.
Of the $3.8 billion in fossil fuel subsidies, the fracked gas and petrochemical industry captured at least $2.0 billion, or 52 percent. Despite the continued pleas of those impacted by fracked gas and petrochemical development, subsidies for these polluting companies are only increasing.
In fact, our Fiscal Year 2019 estimate was unable to capture two of the largest subsidies in the Commonwealth’s history: a $1.65 billion, multi-year tax credit for Shell Chemicals, likely to come online this year, and the $667.5 million, multi-year tax credit for petrochemical manufacturers passed last summer as the rest of us were dealing with the beginnings of the pandemic.
Notwithstanding these two tax credits, Pennsylvania’s fossil fuel subsidies have increased by 14 percent since PennFuture’s last analysis six years ago. The enormous costs are only budgeted to continue increasing over the next several years. Using our Fiscal Year 2019 estimate, fossil fuel subsidies have an average annual cost of $296 per Pennsylvania resident.
Yet it is those living nearest fossil fuel development that pay the highest price. Our report reveals an additional $11.1 billion in external costs from the fracked gas industry, including drinking water contamination, infrastructure damage, and health impacts like respiratory problems and cancers.
Our legislators owe it to each and every Pennsylvanian to do better than this. PennFuture’s report details over 50 fossil fuel subsidies that have covertly wormed their way into Pennsylvania’s tax code and state agencies. Yet at the end of all these harmful, unfair subsidies, we find our way forward with a package of key recommendations.
First, and perhaps most importantly: Pennsylvania’s fossil fuel subsidies are pernicious in part because they are buried out of sight and difficult to disentangle. To tackle this problem, we need enhanced transparency and tracking of all fossil fuel subsidies so that we can accurately understand the scope and nature of the problem at hand.
Even before achieving full transparency, however, there are a few things we can say for sure: fossil fuel development and consumption is not sustaining our communities, it’s fueling their deterioration.
By eliminating the most egregious fossil fuel production subsidies, we have the opportunity to restore $2 billion in foregone revenues to our annual state budget, all while reducing greenhouse gas emissions, alleviating the devastating burden on health and wellbeing, and bringing Pennsylvania’s extraction taxes in line with every other major fossil fuel producing state in the nation.
As we cope with a massive budget shortfall, we are asking our legislators to reconsider the immense harm caused by billions of dollars of fossil fuel subsidies, and to realize all we stand to gain if we chart a different path forward.
We ask that fossil fuel companies, for just once in their centuries-long existence, begin to pay the full price for consumption of limited natural resources, contribute their fair share to the state treasury, and prevent and mitigate their eroding impact on health and wellbeing, the environment, and the climate.
These are common sense solutions at a time we need them most. As budget season progresses, we will have our eyes on Harrisburg, hoping that our elected officials do the right thing.