Obama’s Bid to End Oil Subsidies Revives Debate

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When he releases his new budget in two weeks, President Obama will propose doing away with roughly $4 billion a year in subsidies and tax breaks for oil companies, in his third effort to eliminate federal support for an industry that remains hugely profitable.  Previous efforts have run up against bipartisan opposition in Congress and heavy lobbying from producers of oil, natural gas and coal. But even as the president says he wants to do away with incentives for fossil fuels, his policies continue to provide for substantial aid to oil and gas companies as well as billions of dollars in subsidies for coal, nuclear and other energy sources with large and long-lasting environmental impacts.

And, many environmentalists argue, every day that goes by without a policy to put a price on carbon emissions from all sources is a day in which the federal government subsidizes energy producers by socializing the long-term health and environmental costs of their products.

“My view is the country is better off on having a neutral playing field for all forms of energy,” said Douglas Koplow, founder of Earth Track, a group in Cambridge, Mass., that studies global energy subsidies. 

“President Obama defines ‘clean fuels’ as natural gas, coal with carbon capture, nuclear,” Mr. Koplow said. “From my perspective, if you subsidize carbon capture and storage, that’s a big subsidy for coal. Nuclear is massively subsidized through a risk transfer from shareholders to ratepayers. It’s hard to justify these technologies that can’t make it on their own.”

“If we’re really concerned about greenhouse gases, we should deal with the problem and cap them,” he added. “Instead, politicians and lobbyists want to carve out policies for their own industries.”