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PennFuture calls for end to $3B+ in fossil fuel subsidies

Paul J. Gough – Reporter, Pittsburgh Business Times

A new report from PennFuture finds that the Pennsylvania government’s subsidies for fossil fuel-related projects totaled $3.7 billion for the 2019-20 fiscal year, nearly $300 per Pennsylvania resident.

PennFuture’s study, “Buried Out of Sight: Uncovering Pennsylvania’s Hidden Fossil Fuel Subsidies,” included a wide range of items, including $322.9 million in exemptions from the corporate sales tax, $305.1 million for an exemption of the sale of taxes on natural gas and utility sales, as well as $4.3 million in tax credits for the Keystone Opportunity Zone that relates to projects like Shell Chemicals’ ethane cracker construction in Beaver County.

It also includes foregone revenue including an estimated $530 million each from the lack of a severance tax on the extraction of oil and natural gas as well as what PennFuture called the underpricing of government-owned resources, goods and services. A similar amount of subsidies was slated for the 2020-21 fiscal year, according to PennFuture.

“It’s painful for PennFuture and some of our partners to report today that Pennsylvania’s subsidizing of the fossil fuel industry is rising, forgoing revenue that could be used in so many other and wiser ways,” said Jacquelyn Bonomo, president and CEO of PennFuture.

Bonomo and others in a news conference that accompanied the report said that this year, with a pandemic and other issues weighing on the state, the found money by ending the subsidies and implementing a severance tax would be welcome to state and local budgets spending on infrastructure, health and education, among other areas.

  • To approve a severance tax and cut tax breaks for fossil fuel companies, including realty transfer tax, sales and use tax, and local property tax breaks that they estimated would save $2 billion a year;

  • To eliminate petrochemical tax credits;

  • To work to track and remove at the governor’s office level any subsidies for fossil fuel companies;

  • To provide more focus on the health-related impacts of shale gas development, including adding protections for people who own property near wells and increasing funding for DEP’s Office of Environmental Justice and its Oil and Gas Program.

PennFuture was planning this week to take its recommendations to legislators on both sides of the aisle.

Emily Persico, a PennFuture analyst who is one of the lead authors of the report, said the costs of the fossil fuel industry in Pennsylvania go beyond what was stated in the report from the state budget. She said that there are about $11 billion in other types of damage PennFuture said was tied to the fossil fuel industry, including damage to infrastructure, water contamination and health impacts.

“Right now it’s the local communities that are paying in terms of their quality of life,” Persico said.

Veronica Coptis, executive director of the Center for Coalfield Justice in Washington County, said the report had done a good job in putting costs to extractive industries like coal and oil and gas.

“These are the real impacts that residents are facing in these communities and they are not being considered by our state Legislature,” Coptis said.

Will Delavan, associate professor of economics at Lebanon Valley College and a former DEP economist, said that the subsidies that go to fossil fuel industries are actually paying companies to accelerate climate change.

“We’re doing the wrong thing right now,” Delavan said.

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