G-20 Energy Commitments and US Tax Breaks

Global Solutions and Domestic Problems

Last year in Pittsburg, the Group of Twenty Finance Ministers and Central Bank Governors declared the financial markets stabilized and among other economic priorities, moved to address Energy Security and Climate Change. The group committed, “To phase out and rationalize over the medium term inefficient fossil fuel subsidies while providing targeted support for the poorest.” This movement to address energy market volatility, climate change, and biodiversity loss was reaffirmed in Seoul last week.

However, the member nations are clearly having some difficultly withdrawing these multi-billion dollars subsidies. In the US, consider the CBO numbers for effective tax rates on capital income. The tax rate for petroleum and natural gas structures is 9.2%. Compare this with the 28.4% rate for Hospitals or Educational Buildings. These subsidies have helped to create a dominant fossil fuel sector with over $30 trillion in infrastructure. Even with a ballooning deficit and a squeezed middle class, Congress fears to confront this entrenched giant.