How to stop bailing out the past
by Charlie Jiang
September 1, 2020
As we chart a path out of this crisis, it’s long past time we invest in the green and just future we deserve. But right now, the U.S. government is still giving away our public dollars to the industry of the past.
© Josh Edelson / Greenpeace
The devastation Hurricane Laura wrought this week is staggering. Jacob Blake was shot seven times in the back by police in Kenosha, Wisconsin. The cascading crises we face have laid bare the stark inequality and racism upon which our society is built — and we must forge ahead to a better future.
But right now, the Trump administration is hell-bent on maintaining the status quo. They’ve given fossil fuel CEOs billions of dollars in bailouts during the COVID-19 pandemic, in addition to continuing roughly $15 billion per year in federal tax breaks and subsidies that fossil fuel companies have received for decades.
Communities and workers on the frontlines of environmental injustice and climate catastrophe deserve green, just, and equitable relief. But that won’t happen unless we first stop using public dollars to prop up the very extractive industry driving the climate crisis we face.
U.S. Representatives Ilhan Omar and Nanette Barragán, and Senators Bernie Sanders, Jeff Merkley, and Ed Markey recently introduced the End Polluter Welfare Act (EPWA), which would eliminate U.S. subsidies to the fossil fuel industry and close the door on future bailouts.
Ending fossil fuel subsidies could go a long way to speed the transition away from fossil fuels and send a strong signal to investors that the era of fossil fuels is coming to an end. Eliminating polluter giveaways would allow us to shift billions of dollars of public investment toward a more just, inclusive, and sustainable economy.
It’s a solid first step to ensuring the inevitable transition away from fossil fuels actually creates millions of good-paying, union jobs and a more healthy and safe environment for everyone, while leaving no worker or community behind.
The End Polluter Welfare Act would:
- Eliminate $15 billion annually in U.S. tax breaks and subsidies for fossil fuel companies;
- End federal support for international coal, oil, and gas projects;
- Prohibit publicly-funded fossil fuel research and development;
- Stop the Trump administration from further bailing out fossil fuel CEOs with COVID-19 relief funds intended to support working families;
- Prevent fossil fuel companies from drilling on public lands without paying their fair share;
- Guarantee solvency for the Black Lung Disability Trust Fund to ensure coal workers are provided the medical care they deserve.
Send a message to your Members of Congress asking them to co-sponsor the End Polluter Welfare Act to ensure our government invests in a more green and just future for workers and families, not fossil fuel CEOs.
The Writing’s On the Wall for the Fossil Fuel Industry
Oil is on its way out. https://t.co/CBZbkxxIuw
— Greenpeace USA (@greenpeaceusa) August 25, 2020
For decades, the fossil fuel industry has played a central role in the unjust systems fueling our current public health, economic, racial injustice, and climate crises. Extracting and burning fossil fuels is the primary cause of the climate crisis. Yet, fossil fuel companies have recklessly poured billions of dollars into exploring and drilling for more oil and gas. Their actions contribute to an estimated 230,000 deaths from toxic air pollution — particularly in Black, Indigenous, and Brown and low-wealth communities — and $600 billion dollars in economic losses each year in the U.S. alone.
In July, The Guardian reported that oil giants including Chevron and Marathon are funding police in major cities such as Houston and Detroit. That’s right: fossil fuel giants are sponsoring and serving on boards of “police foundations” that raise money for militarized police. Across the U.S., police have killed 600 people — predominantly Black and Brown people — already this year. Fossil fuel companies are also among those hell-bent on criminalizing peaceful protest in an attempt to silence dissent.
To preserve their dangerous business model, industry executives have peddled climate denial, misinformation, and greenwashing for decades, and they spend millions of dollars each year lobbying against climate action that could hold them accountable.
The COVID-19 crisis, however, has exposed long-standing weaknesses in the fossil fuel industry. The fracking boom that catapulted the U.S. to become the world’s top oil and gas producer has culminated in an industry saddled with junk debt and vulnerable to the next economic shock — a carbon and financial bubble waiting to burst. Amidst cratered demand as people stopped flying and driving during the pandemic, the industry has struggled to adapt to a cascade of unprecedented ripple effects:
- Oil giants including Chevron, ExxonMobil, Shell, and BP are “writing down” the value of their oil reserves and assets to the tune of billions of dollars;
- BP announced it will cut oil and gas production by 40 percent over the next 10 years;
- The oil and gas sector is facing a wave of bankruptcies, including Chesapeake Energy, which led the U.S. fracking boom;
- Marathon Petroleum, a major U.S. oil producer, announced it will permanently close two of its refineries, in California and New Mexico; and
- Just this week, ExxonMobil was dropped from the Dow Jones stock index after nearly a century.
All these impacts have made it clear: the writing is on the wall for the fossil fuel industry. Even industry executives (including in the heart of Texas oil country) and experts are grappling with the idea that this downturn — unlike past dips for an industry accustomed to cycles of boom and bust — may be a sign that the fossil fuel industry is in permanent, inevitable decline.
Workers Feel the Pain
As the industry contracts, however, rank-and-file workers in the oil and gas sector are the ones bearing the brunt of the economic fallout. More than 100,000 U.S. oilfield workers have been laid off since the start of the pandemic. This month, ExxonMobil announced it would stop contributing to its employees’ 401(k) retirement plans. Oil and gas executives are walking away from bankruptcy proceedings with million-dollar payouts, leaving workers behind and forcing communities to clean up the mess.
An unmanaged decline of fossil fuels is an unjust one. We need our governments to act to invest directly in creating good-paying jobs and supporting workers and communities in the transition to a future beyond fossil fuels.
Looking for a Lifeline
Instead, the Trump administration is teaming up with fossil fuel companies to bail out oil and gas CEOs, while leaving workers behind.
We wrote about how the millions that Occidental Petroleum has spent lobbying Congress and donating to top Republican officials appears to have paid off in the form of federal tax breaks and bailouts from the Federal Reserve. We also looked at Marathon Petroleum’s blatant campaign to roll back federal clean car regulations, and the struggling company’s receipt of $411 million in tax benefits from the CARES Act.
To weather the storm, Oxy lobbied President Trump and Congressional Republicans for a lifeline. CEO Vicki Hollub met with Trump in April to plead for an oil bailout. For the 2020 election cycle, Oxy has given over $1M in campaign contributions, of which 98% went to Republicans. pic.twitter.com/OShbntgIMh
— Greenpeace USA (@greenpeaceusa) August 21, 2020
These are just two examples of a slew of bailouts for oil and gas companies — many of whom were already in dire financial straits before the pandemic — including:
- “Royalty relief” to let oil producers off the hook for paying fees for drilling on public lands;
- Billions of dollars in bond purchases and promises by the Federal Reserve to snap up corporate debt, including “junk bonds” from troubled oil and gas companies;
- Relaxed eligibility restrictions for a Federal Reserve corporate loan program to specifically allow struggling oil producers like Occidental to benefit;
- Disproportionate benefits from the Paycheck Protection Program, which was intended to support small businesses during the pandemic (BailoutWatch found that oil and gas companies were more likely to receive PPP loans, and tended to save fewer jobs, than businesses in other key sectors);
- $2 billion in windfalls from changes to tax requirements in the CARES Act.
These bailouts are in addition to the $15 billion that the federal government already doles out each year to coal, oil, and gas companies in the form of tax breaks and direct subsidies. That’s right: billions of our public dollars are used each year to support the very industry whose products are responsible for the majority of planet-warming emissions.
Don’t Bail Out the Past
It makes no economic or moral sense for our government to continue subsidizing a fossil fuel industry undergoing an inevitable decline, and whose actions are contributing to massive levels of air pollution and severe climate disasters in communities across the U.S. and globe —particularly Black, Brown, and Indigenous communities.
It’s long past time for our government to end the practice of subsidizing coal, oil, and gas production. Instead, we should invest directly in a Green New Deal to ensure a just recovery from the crises we face, create good-paying, union jobs in a clean energy future, and protect workers and communities in the energy transition.
The End Polluter Welfare Act is common-sense legislation that every Member of Congress should support right away. It’s a no-brainer kind of policy: a down-payment on the more green, just, and peaceful future that our families and communities deserve. Your voice can ensure that our elected officials get behind this essential legislation and commit to ending fossil fuel subsidies for good as soon as possible.
Tell your Members of Congress to co-sponsor the End Polluter Welfare Act today.