>In the United States, oil companies can take a tax deduction for a large portion of their drilling costs.
Not a tax lawyer, but based on my reading of the linked regulation, the "take a tax deduction" characterization is very misleading. The key phrase is "intangible drilling and development costs incurred by an operator [...] in the development of oil and gas properties may at his option be chargeable to capital or to expense". This doesn't mean the government refunds their development cost, or even a portion of it. It just means oil company can immediately deduct drilling expenses from their tax returns, rather than spreading it out over several years. It's similar to IRC Sec. 174 changes for software development expenses. Is it a benefit to oil companies? Yes, most definitely, due to the time value of money. However, it's misleading to call it a "tax deduction". A more accurate statement would be "oil companies can deduct their drilling costs sooner".
Money now is more valuable than money later. It's an enormous subsidy that shouldn't exist; don't quibble over semantics.
>Is it a benefit to oil companies? Yes, most definitely, due to the time value of money.
For cars, fine, but why is home electricity from fossil fuels being subsidised? You can kill two birds with one stone by subsidising renewable electricity only, no?
So then I would get to pay more for trying to make climate friendly decisions in the form of electrical lawn equipment and EVs? You tend to subsidize in the direction of encouraged behavior.
Yes, which is what I said.
The last section in the article demonstrate the problem. Governments are held responsible for grid stability and making the energy costs economical reasonable, and when the energy crisis happened it was governments that stepped in and paid the bill.
What is not mentioned is that the political movement in EU that usually fight against climate change, that being the green movement, is also the one advocating for fossil fuel subsidies. It was the German green party that pushed EU to classify natural gas as green. In Sweden, it was the green party leader that argued during 2021 that oil power plants was a natural part of grid stability (they also prioritized the construct of new fossil fueled power plant to decrease energy prices). Fossil fuel was and still is the current strategy to address periods of bad weather when renewables can not fulfill demand. The more variable the grid become, the more the government need to spend on grid stability and managing the price, and the more subsidies is needed towards fossil fuels. Fossil fuels subsidies in EU directly correlate to how weather is impacting energy supply.
There is a similar bad situation with hydropower, where current environmental impact is causing extinctions. Usually the green party would be the one arguing for change, but hydropower is needed to address the same problem as power stations running on fossil fuels, and one can generally not fix the environmental impact without decreasing outputs.
If it wasn't for the European Greens fighting against nuclear power for the past 50 years, carbon emissions would be a lot lower today than they are. So much R&D that could have been done, so many CO2-neutral power plants built. Especially after they shut down the last nuclear power plants in Germany it's pretty clear to me that if you're worried about climate change (and also don't want to end up as a third world country) you just don't vote for the Greens.
> It was the German green party that pushed EU to classify natural gas as green.
Well that's not true. They were in a coalition and it was the other parties that pushed for it.
> German ministers have criticised EU plans to label nuclear energy as a sustainable investment, but the government coalition is split on also including fossil gas in the taxonomy. Finance minister Christian Lindner of the pro-business Free Democrats (FDP) welcomed the European Commission’s proposal to include gas as a transitional fuel towards climate neutrality, while Green Party ministers criticised the decision as “greenwashing”.
To say that the greens are not involved in the environmental decisions, especially the National Hydrogen Strategy, would be very false. the National Hydrogen Strategy explicitly calls out natural gas as a central role, for which was the basis when Germany advocated to label natural gas as a sustainable investment.
We can run around in circles looking for political disagreements within the coalition, but this is the German environmental policy for which the greens support and helped creating. Invest into (and subsidize) renewables to create cheap clean energy when the weather is optimal, and invest into (and subsidize) natural gas to create cheap grid stability for when the weather is suboptimal. When the technology is there, then shift towards green hydrogen. The strategy has been exceptional consistent and operated for at least 2 decades, with the result being exactly what the strategy planned. Increased use of renewables in both output and subsidizes, increased subsidizes in fossil fuels, and reduced use of nuclear power and coal. The only thing that did not go as plan was Russian invasion of Ukraine, and the natural gas pipeline to Russia that then got blown up.
The EU support was for the move from coal to gas.
The EU had requirements on that in order for it to qualify as "green" that the Germans wanted tweaked to be more lenient.
But the underlying goal is fine. Gas is better than coal in many ways. Supply from Russia and knowledge of what has happened since then complicates matters but in general I think support for replacing old coal with new gas is a good thing if you have access to both, it's been a big part of America's progress.
Hydrogen is a big topic, a lot of which is BS but at the core there's a place for it as an industrial input which is relevant for Germany. And if you have that in place then also using it as a backup which you ideally don't need to use is a cheap way of hitting those last few percent of reliability.
I can find plenty of things to criticise Germany over, but most of the criticism I see is frankly nonsense.
If the goal is to go from coal to gas without much additional concerns, then yes, it doesn't matter if fossil fuel subsidize increased or that the country get more dependent on fossil fuel imports. The goal was achieved and so it was a success.
The critique they get is that there are other goals and the outcome of the strategy that Germany deployed had terrible outcomes. It costs too much, it has too much pollution, and it had very negative geopolitical consequences. It is also not a cheap way of hitting those last few percent of reliability, as is demonstrated with the increase in subsidizes and taxes to solve the issue of grid stability. A part of the issue is that the strategy assumed that market forces would force consumers to not consume during suboptimal weather conditions, but as has been demonstrated, citizens will vote to have the governments that provide a reliable priced energy grid. That makes the last few percent even more expensive as citizens don't want to pay the market price of a highly variable grid.
Criticizing the outcomes of an explicit strategy is very much fair game, and it is still the official strategy in Germany.
> but as has been demonstrated, citizens will vote to have the governments that provide a reliable priced energy grid.
I hope so, because every professional working in the field is delivering that with more renewables and better regulation.
It's the paid off politicians that are scrambling to protect their funders in the fossil fuel industry and keep prices high.
Sadly, what you really mean is that right wing propaganda works and science and facts are not important and somehow that's considered a victory to you.
A lot of it is due to the odd use of the word subsidy in this and similar articles.
Say an oil company spends $50 producing a barrel of oil, sells it for $80 and sends half the difference, $15 to the government in tax. On the definitions in this article the government is likely subsidising the oil production because they are likely "take a tax deduction for a large portion of their drilling costs" and not billing for the pollution effects. But in everyday language they are taxing not subsidising oil production.
And then what should the government do? If they ban drilling or double the tax they lose the tax revenue and jobs.
>...a government fails to make an industry pay for damage it causes, such as air or water pollution, that also amounts to a subsidy.
Thinking about that one, there are a lot of bacteria that break down vegetation releasing CO2 and the government fail to tax them! Stop subsidising bacteria!
Actually I prefer the old fashioned definition of subsidy - money paid to industry is a subsidy, money extracted is a tax even if the tax calculation includes deductions.
In Austria (and Germany too it think) the further away you drive to work, the more money the government gives you for fuel in your tax return. But WFH? No, that's not possible, we don't do that here, so every morning the highways are full of people subsidized by the state to spend their day in an office doing what they can do from home.
I work with some germans and they work from home all the time.
On the plus side, the tax return of work commute by car increases labour supply and enables people to live further from the high density areas, not everyone can wfh.
With electric vehicles, maybe they are good enough even from an environmental perspective.
>I work with some germans and they work from home all the time.
I was talking from the perspective of Austria. 100%W FH is none existent. Most is hybrid.
>On the plus side, the tax return of work commute by car increases labour supply and enables people to live further from the high density areas, not everyone can wfh.
Yeah of course, the issue is when you can WFH but employers would rather you burn fuel to get to the office and the state supports that waste while taking about how climate friendly they are. Well if the state would be climate friendly wouldn't they support WFH?