Study Finds Fossil Fuels Aren’t Subsidized; They’re Overtaxed

Wind and solar power are held back by technology, not unfair competition

Arlington, Va., July 23, 2020. The CO2 Coalition of 55 climate scientists and energy economists today released a detailed economic study of subsidies and taxes on fossil fuels in the United States, and internationally. Written by international energy expert and Coalition member Dr. Bruce Everett,
a professor of international business for 17 years at the Fletcher School of Tufts University, the 26-page White Paper is titled Do Government Policies Favoring Fossil Fuels Hamper the Development of Wind and Solar Power?

While advocates of wind and solar power often claim that these sources of power are disadvantaged by billions, even trillions of dollars in fossil fuel subsidies, the Coalition White Paper finds that the net effect of government policies is to raise, rather than lower, the price of energy from fossil fuels.The study concludes that: “Although most countries do offer some subsidies to fossil fuels, the massive taxes imposed by most governments are generally far higher, resulting in a net increase in the price of fossil fuels. Taking into account all taxes and subsidies, fossil fuels in the United States are overtaxed $50 billion per year. The 28 other largest industrial democracies are overtaxed $363 billion, and the BRIC countries (Brazil, Russia, India, and China) are overtaxed $104 billion. The primary exceptions to this rule are found in oil-producing developing countries that offer their citizens heavily subsidized motor fuels but are not likely candidates for renewable energy.”

Dr. Caleb Stewart Rossiter, the CO2 Coalition’s executive director, said, “Wind and solar power, both in the United States and internationally, are heavily subsidized by mandates for utilities to purchase their costly electricity, as well as tax credits and public financing. It is renewables, not fossil fuels, that have the competitive advantage when it comes to government intervention in the energy markets. Despite this advantage, wind and solar remain in the single digits as a share of American and global energy consumption. As a previous CO2 Coalition White Paper, The Social Cost of Carbon and Carbon Taxes, showed, their true cost is four times that of fossil-fueled power. They are not ready for prime time yet, but that’s because of technological challenges, not wildly-exaggerated fossil fuel subsidies.”

This White Paper and its related excel calculations can be found here.


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