• Siya Goel

The Harms of Fossil Fuel Subsidies

Updated: Aug 21, 2020

Greta Thunberg once said, “until you start focusing on what needs to be done rather than what is politically possible, there is no hope. We can’t solve a crisis without treating it as a crisis. We need to keep fossil fuels in the ground, and we need to focus on equity. And if solutions within a system are so impossible to find, maybe we should change the system itself [2].” What most people don’t know, is that there is a clear cut solution to the problems Greta is referring to, the elimination of fossil fuel subsidies.

The main reason why fossil fuel subsidies should be eliminated is that they create a system that is immoral, going against society’s belief in utilitarianism. Morality is defined as a code of conduct that distinguishes the rights from wrongs and is therefore used by all people. Fossil fuel subsidies also go against utilitarianism, which is an action that produces the most good or maximizes happiness, leading to a moral society [10]. Fossil fuel subsidies are immoral and go against the principles of utilitarianism as it is a sum of money granted by the government to assist the fossil fuel industry [5]. The harms of these subsidies are that they aid the fossil fuel industry which in turn has dangerous effects. This includes the inefficiency in pricing, the creation of a debt, and environmental damage. This blatantly shows us that fossil fuel subsidies destroy our society, and are simply immoral.

Nevertheless, these subsidies are detrimental to society as they encourage wasteful use of resources, which are meant to be efficient and cheap. These subsidies only benefit the rich more than the poor. In fact, an IMF analysis shows us that on average only 7 percent of fossil fuel subsidies reach the poorest 20 percent of households in the United States [6]. The problem that this poses to society, is that they are not solving the problems they intend to solve. For example, many people say that the benefits of fossil fuels include their cheapness and accessibility, but why does this matter if they are not proving their function [5]? The reason why the cheapness and accessibility get outweighed is because of the fact that businesses are the only group that is earning a benefit. This is simply outrageous, as these subsidies produce an immoral society that only benefits the elite and rich, a group that doesn’t even need this financial support. Instead, these subsidies have created an excess profit. fit. At the current price of $50 a barrel, about half (53%) of subsidy value goes to projects that would have preceded right away, benefitting the companies [9]. Therefore, society in the status quo only benefits the elite when it comes to energy and fossil fuel subsidies. This truly goes against the righteousness of society, making a system immoral and being unjust to the poor.

Further, these fossil fuel subsidies are not even efficient and lead to debt. In fact, the total amount of deadweight loss from fossil fuel subsidies worldwide is $44 billion. Since the United States is a major producer of fossil fuels, they contribute significantly to this [3]. Deadweight loss is a loss of economic inefficiency in terms of the utility of consumers. So basically, the money put into fossil fuels could be used more effectively if it is put into other situations. This produces a win-win situation, as the money is not being wasted, and we are benefitting a greater scope of people. The effects of the removal of subsidies are emphasized, as removing fossil fuel subsidies would deliver approximately $41.4 billion in greater revenues to the U.S., decreasing debt. Not just this, but the subsidies could be used to help finance much-needed investments in repairing and modernizing America’s infrastructure [1]. In the end, we can see how these subsidies could be used to benefit other areas in society, helping the United States effectively use their money. In fact, the infrastructure is only one example, as this money can help with improving healthcare for all. Nevertheless, removing these subsidies will be helpful to all groups of society regardless of their differences, maximizing Utilitarianism, and morality.

Another reason why fossil fuel subsidies should be removed is because of their harmful effects on the environment. In fact, the U.S. emitted 5.4 billion tons of carbon dioxide in 2015, with a cost per ton of $36. So basically, our country is using subsidies to make the world an overall-worse place [7]. Not only are these subsidies increasing unneeded debt for America, but they are harming the environment. This creates an immoral system as the money the United States is putting into the industry, is just being burned to lead to extinction. Removing these fossil fuels would significantly decrease global warming as global carbon emissions would decrease by 28 percent and fossil fuel air pollution deaths by 46 percent [4]. So the question environmentalists propose is how are these subsidies maximizing the wellness of society if they are just leading to the planet’s doom? How are we going to protect the grand, beautiful, blue oceans of our planet? The lush, green forests of the world? The answer is, these subsidies are not, as the status quo only cares about the money given to companies. But think about the benefits given to humanity if we could reduce carbon emissions by 28 percent. This system had the most moral outlook, as it is doing what is right for society. Since the United States is a world power, reducing carbon emissions will cause other countries to do the same. Removing U.S. fossil fuel subsidies would enable the U.S. government to influence large developing countries (such as China and India) to phase out their fossil fuel consumption subsidies, too [8]. Clearly, removing fossil fuel subsidies will effectively decrease the amount of CO2 present in the world, maximizing utilitarianism and upholding morality.

The world of no subsidies would produce a society with uttermost righteousness, as it is concerned with the happiness of everyone and is not corrupted by the elite. Fossil fuel subsidies would also help the world’s issue of carbon emissions, an issue which will lead to catastrophe quickly. As Greta mentioned, if we want to reverse climate change, we have to change the system, and the only way to do this is through the elimination of fossil fuel subsidies. Thus, we have to look beyond the benefit of one group of people and more at the benefit of everyone, maximizing utilitarianism.


[1] Aldy, J. (2013). Proposal 5: eliminating fossil fuel subsidies. 15 ways to rethink the federal

budget, 31-35.

[2] Carrington, D. (2019, September 19). Greta Thunberg: 'We are ignoring natural climate solutions'. Retrieved from https://www.theguardian.com/environment/2019/sep/19/greta-thunberg-we-are-ignoring-natural-climate-solutions

[3] Coady, D., Parry, I. W., Sears, L., & Shang, B. (2015). How large are global energy

subsidies? (No. 15-105). International Monetary Fund.

[4] Erickson, P., Down, A., Lazarus, M., & Koplow, D. (2017). (Rep.). Stockholm Environment

Institute. Retrieved from http://www.jstor.org/stable/resrep02806

[5] Fossil Fuel Subsidies & Finance. (n.d.). Retrieved from http://priceofoil.org/fossil-fuel-subsidies/

[6] Helen Mountford, J. A. (2018, September 26). How Big Are Fossil Fuel Subsidies? Let's Make it Clear. Retrieved from https://www.wri.org/blog/2015/11/how-big-are-fossil-fuel-subsidies-let-s-make-it-clear

[7] Jina, A. (2017, February 01). The $200 Billion Fossil Fuel Subsidy You've Never Heard Of. Retrieved from https://www.forbes.com/sites/ucenergy/2017/02/01/the-200-billion-fossil-fuel-subsidy-youve-never-heard-of/#38272462652b

[8] Ma, X. (2017). Natural gas and energy revolution: A case study of Sichuan–Chongqing gas

province. Natural Gas Industry B, 4(2), 91-99.

[9] Piccirilli Dorsey, Inc. (n.d.). Fact Sheet: Fossil Fuel Subsidies: A Closer Look at Tax Breaks and Societal Costs. Retrieved from https://www.eesi.org/papers/view/fact-sheet-fossil-fuel-subsidies-a-closer-look-at-tax-breaks-and-societal-costs

[10] Stanford Philosophy. (2019). Retrieved from https://plato.stanford.edu/

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