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Effect of government subsidies for upstream oil infrastructure on U.S. oil production and global CO2 emissions

The United States now produces as much crude oil as ever – over 3.4 billion barrels in 2015, just shy of the 3.5 billion record set in 1970. Indeed, the U.S. has become the world’s No. 1 oil and gas producer. The oil production boom has been aided by tax provisions and other subsidies that support private investment in infrastructure for oil exploration and development. Federal tax preferences, for example, enable oil and gas producers to deduct capital expenditures faster, or at greater levels, than standard tax accounting rules typically allow, boosting investment returns.

Measuring distortions in international markets: Below-market finance

The support that governments provide to their industrial producers has been a growing source of concern. Much of that support is provided by governments through the financial system, either in the form of below‑market borrowings or below-market equity. To better understand the nature and scale of this support, this report uses publicly available information for 306 of the largest manufacturing firms in 13 industrial sectors, covering the period 2005-19.

How subsidies aided the US shale oil and gas boom

 

This analysis looks at the last two decades of investment data for US oil and gas fields to evaluate how major federal subsidies may have played a role in the huge boom in US oil and gas production. It finds that federal subsidies amplified the expected financial returns of investing in unconventional oil and gas development, thereby helping to spur and sustain the US shale boom over the last two decades.

Decarbonizing Harvard’s Endowment : Reviewing Harvard Management Company’s First Climate Report

Harvard Management Company (HMC), which manages Harvard University’s nearly $42 billion endowment, released its first Climate Report in February 2021.  As the largest university endowment in the world, decisions Harvard makes to tangibly and materially reduce the climate impact of its investments will garner significant attention around the world and provide space for many other institutions to make similar moves.  Further, the school has the scale and the stature to coordinate with other institutional investors and accelerate the pace of financial innovation across asset classes t

Fossil-Fuel Subsidies Must End: Despite claims to the contrary, eliminating them would have a significant effect in addressing the climate crisis

When it comes to tackling the climate crisis, ending $400 billion of annual subsidies to the fossil-fuel industry worldwide seems like a no-brainer. For the past decade, world leaders have been resolving and reaffirming the need to phase them out.

Review of Proposed ‘‘Coronavirus Aid, Relief, and Economic Security Act’’ or the ‘‘CARES Act’’

In an effort to response to the widespread health and economic issues associated with the coronavirus pandemic, Congress has been working on legislative responses.  This is the second major stimulus bill, an initiative led by Senate Majority Leader Mitch McConnell.  The bill provides roughly $1 trillion in economic stimulus; more once tax impacts are included.

The attached document contains comments on particular provisions, as input to the process of improving the targeting and efficiency of the bill.

Adding Fuel to the Fire: Export Credit Agencies and Fossil Fuel Finance

Export credit agencies are little-known government-backed financial institutions that provide loans, guarantees, and insurance with the aim of supporting exports of goods or services from their country to outside markets. This report from Oil Change International and Friends of the Earth U.S. shows that since the Paris Agreement was made, G20 countries have used their export credit agencies to provide nearly 12 times more finance to fossil fuels than to clean energy. 

The Production Gap 2019 Report: The discrepancy between countries’ planned fossil fuel production and global production levels consistent with limiting warming to 1.5°C or 2°C

This report addresses the necessary winding down of the world’s production of fossil fuels in order to meet climate goals. Though coal, oil, and gas are the central drivers of climate change, they are rarely the subject of international climate policy and negotiations.

Why fossil fuel producer subsidies matter

This article in Nature explains how subsidies affect fossil fuel investment and why they deserve greater attention in global modelling analyses.

It responds to a 2018 study in Nature that used the results of integrated assessment models to infer that eliminating subsidies would yield “limited emission reductions…except in energy-exporting regions”, and described the emission reduction benefits as “small”.