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That big headline $5.2 trillion figure isn't money that was spent on anything. They're counting the difference between the actual market price of fossil fuels a

by makomk 7y ago

That big headline $5.2 trillion figure isn't money that was spent on anything. They're counting the difference between the actual market price of fossil fuels and what they think should be charged for them due to air pollution etc as a subsidy.

bildung 7y ago
If the society knowingly pays the difference between market price and actual price, that effectively is a subsidy. Edit: That money is actually spent, though indirectly through health care etc.
SamBam 7y ago
At least some of that was, in fact, hard cash subsidies. The US spends around $35 billion/year in actual subsidies on fossil fuels.[1] (About $20 billion to producers, and about $15 billion to consumers. Further more, the cost of not charging the fossil fuel industry for carbon emissions should absolutely be counted as a real subsidy, although its value is harder to calculate. But we force industries to clean up other pollutants, or we otherwise regulate their environmental impact, which costs them. If we gave one industry a pass on those regulations, that would be uncontroversially a subsidy. 1. https://www.theguardian.com/environment/climate-consensus-97-per-cent/2018/jul/30/america-spends-over-20bn-per-year-on-fossil-fuel-subsidies-abolish-them https://www.theguardian.com/environment/climate-consensus-97...
- roenxi 7y ago
  But since any activity changes the environment for the worse, by that logic everything is subsidised. We can't use language that way - words become meaningless. Logically it goes straight to a silly place where everyone is getting 'welfare' because the government isn't taxing them for breathing out CO2. A subsidy is the government forcing more resources to be allocated to something than people with money think is good. An externality is when we believe that outcomes are affecting people who weren't the buyer/seller. The environmental lobby wants to claim that fossil fuels are subsidised therefore we must stamp them out because it is Free Market. Charitably speaking, that really just shows the environmentalists are making an effort to use other people's language but don't understand the free market philosophy at a fundamental level. If the use of something has to stop for environmental reasons then it is taxed. Claiming that it is really reversing a subsidy comes out more as trying to shout the opposition down by changing what words mean on them. It is bad form.
  - danans 7y ago
    > A subsidy is the government forcing more resources to be allocated to something than people with money think is good. An externality is when we believe that outcomes are affecting people who weren't the buyer/seller. In common speech "subsidize" is frequently used in the context of people being made to involuntarily bear externalities. For example, people who live in areas with a lot of truck traffic often complain that they are being forced to "subsidize" trucking due to the damage to their local roads. What they mean is that they are being forced to bear the externality of excessive road damage, not that they are literally writing a check to the trucking company.
    - tapland 7y ago
      They are specificly using that word to get the same errendous implication. They aren't subsidizing trucking, but saying they are instead of 'our roads get worn faster' makes it easier to lobby for changes or money to improve the road. I.e. You are demonstrating the exact same error but don't seem to understand what's going on with the use of the word.
      - danans 7y ago
        > They aren't subsidizing trucking, but saying they are instead of 'our roads get worn faster' makes it easier to lobby for changes or money to improve the road. That money they are lobbying for comes from their taxes, especially if it's local roads, so yes, if the trucking company isn't paying for the damage, the taxpayer is indirectly subsidizing them.
        vonmoltke 7y ago
        By that logic, everything tax revenue is spent on is a subsidy for someone. It makes the definition so broad as to be useless.
        danans 7y ago
        Not all unaccounted externalities (if you prefer that term) are of the same magnitude, though. It's the magnitude relative to others that matters. If say 10% of a city's budget goes to fixing truck damage to roads without at least commensurate benefit, then it's a more important issue than whether .05% went to cleaning up cotton candy after the town fair. It also doesn't even have to be about tax expenditure. The healthcare cost of using fossil fuels is realized in private spending on treatment for pollution triggered respiratory illnesses, and the economic cost of climate change effect mitigation, which is already being accounted for in business planning.
- md2be 7y ago
  That like saying that the porn industry is being subsidized for the costs of divorce
  - danans 7y ago
    Not really, because in your example the consumer has a choice whether or not to consume the product. Not that there is no externality - all activities have externalities - but the scales are completely different than with electricity production, and scale is what makes the case of fossil fuels different. Electricity is considered a human right - it is required maintain the most basic modern standard of living - and the externalities of it's production with fossil fuels are borne by everyone in some way. Therefore it's a matter of massively broader consequence and greater cost than the example you used.
- deleted 7y ago
  [deleted]
nmeofthestate 7y ago
Some of it is heating subsidies for the poor, which gives a misleading impression, unless we're planning for the poor to freeze once we've transitioned to renewables; the subsidy will simply transfer across.
- AnthonyMouse 7y ago
  The existing subsidies are often specific to fossil fuels (heating oil and natural gas). You don't get them for installing electric heat pumps. The better alternative would be to provide the subsidy in cash and let the poor decide what they need for themselves, instead of trying to choose for them between heating oil vs. investing in heat pumps vs. better insulation vs. turning down the thermostat and using the money for something else they need more.
  - darksaints 7y ago
    You give them the money, and they'll spend it on blackjack and hookers. Regardless of whether you give them subsidy money, you have to charge higher prices for energy if you want any hope of reducing fossil fuel use.
    - AnthonyMouse 7y ago
      > You give them the money, and they'll spend it on blackjack and hookers. Stuff is fungible. If you give someone money for heating oil then they'll spend it on heating oil and use the money they would have spent on heating oil for blackjack and hookers if they want to. The only thing you're really doing is forcing them to buy heating oil instead of actual substitutes for burning more heating oil, like heat pumps or better insulation. Because one way or another they need to heat their living space, but if you satisfy that requirement for them in a specific way, it still frees up resources that they would have had to use for that and can now use for unrelated things like blackjack and hookers.
    - ClumsyPilot 7y ago
      I would say that's an administrative issue that's a bit tangential.
mikeash 7y ago
Which is to say, it’s a subsidy that we pay with people’s health and people’s lives.
darksaints 7y ago
Accounting isn't just lying with numbers. Those are real costs whether they're paid for in cash or otherwise. They may be hard to estimate, but they're real costs. For example, if you build roads and don't charge users to use them, they are going to use those roads more than if you charged users the costs that they incur for construction and maintenance. Building roads but not charging for their use is a subsidy to vehicle use, which is also a subsidy to all of the inputs of vehicle use, including mining, manufacturing, and yes, fossil fuel consumption. The same goes for environmental costs. You either pay for them with cash or you pay for them with a destroyed environment. And even with a destroyed environment, you're probably still paying in cash, just indirectly, deferred substantially, and with significant interest.

by makomk 7y ago

bildung 7y ago

If the society knowingly pays the difference between market price and actual price, that effectively is a subsidy. Edit: That money is actually spent, though indirectly through health care etc.

SamBam 7y ago

At least some of that was, in fact, hard cash subsidies. The US spends around $35 billion/year in actual subsidies on fossil fuels.[1] (About $20 billion to producers, and about $15 billion to consumers. Further more, the cost of not charging the fossil fuel industry for carbon emissions should absolutely be counted as a real subsidy, although its value is harder to calculate. But we force industries to clean up other pollutants, or we otherwise regulate their environmental impact, which costs them. If we gave one industry a pass on those regulations, that would be uncontroversially a subsidy. 1. https://www.theguardian.com/environment/climate-consensus-97-per-cent/2018/jul/30/america-spends-over-20bn-per-year-on-fossil-fuel-subsidies-abolish-them https://www.theguardian.com/environment/climate-consensus-97...

roenxi 7y ago
But since any activity changes the environment for the worse, by that logic everything is subsidised. We can't use language that way - words become meaningless. Logically it goes straight to a silly place where everyone is getting 'welfare' because the government isn't taxing them for breathing out CO2. A subsidy is the government forcing more resources to be allocated to something than people with money think is good. An externality is when we believe that outcomes are affecting people who weren't the buyer/seller. The environmental lobby wants to claim that fossil fuels are subsidised therefore we must stamp them out because it is Free Market. Charitably speaking, that really just shows the environmentalists are making an effort to use other people's language but don't understand the free market philosophy at a fundamental level. If the use of something has to stop for environmental reasons then it is taxed. Claiming that it is really reversing a subsidy comes out more as trying to shout the opposition down by changing what words mean on them. It is bad form.
- danans 7y ago
  > A subsidy is the government forcing more resources to be allocated to something than people with money think is good. An externality is when we believe that outcomes are affecting people who weren't the buyer/seller. In common speech "subsidize" is frequently used in the context of people being made to involuntarily bear externalities. For example, people who live in areas with a lot of truck traffic often complain that they are being forced to "subsidize" trucking due to the damage to their local roads. What they mean is that they are being forced to bear the externality of excessive road damage, not that they are literally writing a check to the trucking company.
  - tapland 7y ago
    They are specificly using that word to get the same errendous implication. They aren't subsidizing trucking, but saying they are instead of 'our roads get worn faster' makes it easier to lobby for changes or money to improve the road. I.e. You are demonstrating the exact same error but don't seem to understand what's going on with the use of the word.
    - danans 7y ago
      > They aren't subsidizing trucking, but saying they are instead of 'our roads get worn faster' makes it easier to lobby for changes or money to improve the road. That money they are lobbying for comes from their taxes, especially if it's local roads, so yes, if the trucking company isn't paying for the damage, the taxpayer is indirectly subsidizing them.
      - vonmoltke 7y ago
        By that logic, everything tax revenue is spent on is a subsidy for someone. It makes the definition so broad as to be useless.
        danans 7y ago
        Not all unaccounted externalities (if you prefer that term) are of the same magnitude, though. It's the magnitude relative to others that matters. If say 10% of a city's budget goes to fixing truck damage to roads without at least commensurate benefit, then it's a more important issue than whether .05% went to cleaning up cotton candy after the town fair. It also doesn't even have to be about tax expenditure. The healthcare cost of using fossil fuels is realized in private spending on treatment for pollution triggered respiratory illnesses, and the economic cost of climate change effect mitigation, which is already being accounted for in business planning.
md2be 7y ago
That like saying that the porn industry is being subsidized for the costs of divorce
- danans 7y ago
  Not really, because in your example the consumer has a choice whether or not to consume the product. Not that there is no externality - all activities have externalities - but the scales are completely different than with electricity production, and scale is what makes the case of fossil fuels different. Electricity is considered a human right - it is required maintain the most basic modern standard of living - and the externalities of it's production with fossil fuels are borne by everyone in some way. Therefore it's a matter of massively broader consequence and greater cost than the example you used.
deleted 7y ago
[deleted]

nmeofthestate 7y ago

Some of it is heating subsidies for the poor, which gives a misleading impression, unless we're planning for the poor to freeze once we've transitioned to renewables; the subsidy will simply transfer across.

AnthonyMouse 7y ago
The existing subsidies are often specific to fossil fuels (heating oil and natural gas). You don't get them for installing electric heat pumps. The better alternative would be to provide the subsidy in cash and let the poor decide what they need for themselves, instead of trying to choose for them between heating oil vs. investing in heat pumps vs. better insulation vs. turning down the thermostat and using the money for something else they need more.
- darksaints 7y ago
  You give them the money, and they'll spend it on blackjack and hookers. Regardless of whether you give them subsidy money, you have to charge higher prices for energy if you want any hope of reducing fossil fuel use.
  - AnthonyMouse 7y ago
    > You give them the money, and they'll spend it on blackjack and hookers. Stuff is fungible. If you give someone money for heating oil then they'll spend it on heating oil and use the money they would have spent on heating oil for blackjack and hookers if they want to. The only thing you're really doing is forcing them to buy heating oil instead of actual substitutes for burning more heating oil, like heat pumps or better insulation. Because one way or another they need to heat their living space, but if you satisfy that requirement for them in a specific way, it still frees up resources that they would have had to use for that and can now use for unrelated things like blackjack and hookers.
  - ClumsyPilot 7y ago
    I would say that's an administrative issue that's a bit tangential.

mikeash 7y ago

Which is to say, it’s a subsidy that we pay with people’s health and people’s lives.

darksaints 7y ago

Accounting isn't just lying with numbers. Those are real costs whether they're paid for in cash or otherwise. They may be hard to estimate, but they're real costs. For example, if you build roads and don't charge users to use them, they are going to use those roads more than if you charged users the costs that they incur for construction and maintenance. Building roads but not charging for their use is a subsidy to vehicle use, which is also a subsidy to all of the inputs of vehicle use, including mining, manufacturing, and yes, fossil fuel consumption. The same goes for environmental costs. You either pay for them with cash or you pay for them with a destroyed environment. And even with a destroyed environment, you're probably still paying in cash, just indirectly, deferred substantially, and with significant interest.