Governmental Support of Fossil Fuel Development and Infrastructure

By: Savannah Wirth

By now everyone knows that the burning of fossil fuels is the main contributor to global climate change… Right? Unfortunately, we also know how much money is generated by the fossil fuel industry. And world governments know that too. Modern society, literally, runs on fossil fuels. But for decades now scientists have been warning that our carbon emissions will, and already are, catching up to us. Despite this, and agreeing at global summits like COP26, to decrease fossil fuel investment by phasing out fossil fuel subsidies, global fossil fuel subsidies have risen $2 trillion to $7 trillion in just two years from 2021 to 2023. Government subsidies for the fossil fuel industry for the year 2022 were highest in China and the United States. China leads with a whopping $2.2 trillion in subsidies and the US with $760 billion in subsidies. The rest of the highest fossil fuel subsidies in 2022, in descending order, are Russia, India, the EU, the Middle East, and Canada. Governments’ goal in subsidizing fossil fuels is to protect consumers from rising energy prices, but this does nothing to combat climate change. Many government fossil fuel subsidies have been in place for nearly 100 years. Federal energy tax policy for over fifty years has focused almost completely on domestic oil and gas production. Governmental funding and support for fossil fuel exploration and expansion have been significant factors in the growth of the fossil fuel industry. A few of key ways that the government supports the continued expansion of the fossil fuel industry are;

Subsidies - This is arguably the most impactful and the most common form of government support of the industry. These can be in the form of direct subsidies, tax breaks, and incentives. Exploration tax credits, depletion allowances, and enticing royalty rates for extracting resources from public lands. Although, The Bureau of Land Management (BLM) is working on changing public land extraction subsidies.

Infrastructure Development - Governments often invest in infrastructure for the extraction and transportation of fossil fuels. These investments include roads, ports, and pipelines to transport it to the market.

Research and Development - Governments sometimes fund research and development initiatives to improve technologies for fossil fuel extraction, such as hydraulic fracturing (fracking) or enhanced oil recovery methods. These investments can lower production costs and increase the profitability of fossil fuel projects.

International Financing - Governments may provide financing and support for fossil fuel projects abroad through international development banks or export credit agencies. This support can help companies secure financing for large-scale projects in other countries.

Regulatory Support - Regulatory frameworks can also support fossil fuel industries by providing favorable permitting processes, environmental regulations, and land access policies. While these regulations are intended to ensure safety and environmental protection, they can sometimes be influenced by industry lobbying efforts.

Political Influence - Fossil fuel industries have crucial political influence through lobbying and campaign contributions. This influence can shape government policies and decisions in ways that favor fossil fuel exploration and expansion. Governments have a record of promising to phase down fossil fuel extraction and expansion, and their plans have proven to be the complete opposite. 

Here is an amazing short video that explains why governments are still funding the fossil fuel industry, and the main challenges they face when attempting to phase out of these policies.

The above graph illustrates the difference between governments’ plans and projections and levels consistent with limiting global temperatures to 1.5°C and 2°C above pre-industrial levels. As you can see, it seems global governments are completely ignoring their international agreements to do their part to prevent further climate warming by fossil fuel emissions.