by Rebecca Leber and Jackie Weidman

ExxonMobil and Royal Dutch Shell, No. 1 and No. 2 on the Fortune 500 Global companies list, announced their third-quarter earnings on Thursday. Compared to last year’s earnings, both companies’ profits are down slightly — 7 percent for Exxon and 15 percent for Shell — on weaker oil prices. However, ExxonMobil and Shell earned $9.6 billion and $6.1 billion respectively, bringing their total 2012 profits to $35 billion for Exxon and $18.9 billion for Shell.

These two companies, along with the rest of the Big Five, continue to receive century-old annual tax breaks. At the same time, Exxon and Shell funnel a portion of their dollars toward lobbying against environment and public health protections, while also funding climate denier candidates. This summer, Exxon CEO Rex Tillerson said that he recognized carbon pollution causes warming, but minimized the full impact saying “those consequences are manageable.” Meanwhile, extreme weather damages in the U.S. alone have potentially cost up to $144 billion since 2011.

Below are the highlights of where Exxon and Shell spend their earnings:

ExxonMobil:

– Exxon received an estimated $600 million in annual tax breaks. It paid just a 13 percent federal tax rate.
– Exxon spent $5.1 billion — or 53 percent– of this quarter’s profits to buy back its own stock, which enriches the largest shareholders.
– Oil production for Exxon for Q3 in 2012 is 5 percent lower than this time last year (2.1 million of barrels per day in Q3 2012 vs. 2.2 million in Q3 2011).
– In 2012 alone, Exxon spent $12.7 million lobbying Congress, according to the latest Federal Election Commission figures.
– Exxon spent $2.1 million on direct federal and congressional campaign contributions so far in the 2012 election cycle, with 90 percent going to Republicans.
– Some of the biggest Congressional recipients include Senate Minority Leader Mitch McConnell (R-KY), Sen. John Barrasso (R-WY), and Speaker of the House John Boehner (R-OH).
– Exxon’s CEO Rex Tillerson’s total compensation in 2011 was $34.9 million.

Royal Dutch Shell:

– Shell received a $200 million annual tax break in 2011.
– Shell has $18.8 billion in cash-on-hand.
– In the third quarter, Shell used $149 million of its profits to buy back its own stock.
– Shell’s oil production decreased by 5 percent compared to this time last year (1.59 million of barrels per day in 2012 vs. 1.67 million in 2011).
– Shell spent more on lobbying than the other Big Oil companies – $12.9 million so far in the 2012 election cycle – according to the latest Federal Election Commission figures.
–Shell just finished drilling top holes in Arctic waters for the year, after issues with its containment barge and ice flows created delays.

The last of the Big Five oil companies, Chevron, will release its third quarter profits Friday.

By Jackie Weidman and Noreen Nielsen

ConocoPhillips announced its 2012 third-quarter profits this morning, reporting earnings of $1.8 billion — a decline of 31 percent due to a drop in crude oil prices and natural gas.

ConocoPhillips has made $7 billion in profits in 2012 alone. Earlier this year, ConocoPhillips split into two companies – ConocoPhillips and Phillips66 – with ConocoPhillips controlling upstream business, and Phillips66 taking over the refineries side.

ConocoPhillips is ranked as the ninth-largest company in the world in the 2012 Global Fortune 500. It receives an estimated annual average of $600 million dollars in tax breaks, and continues to spend millions of dollars to influence lawmakers.

Below is a quick glimpse at what ConocoPhillips is using its billions of dollars in profits for:

– ConocoPhillips has already spent $1.9 million lobbying Congress this year. Since 2011, ConocoPhillips spent over $20 million on lobbying Congress, making it the top spender of the oil and gas industry.

– Conoco has contributed over $483,000 to federal campaigns this year, with 90 percent of the contributions going to Republicans.

– Conoco is sitting on $1.3 billion in cash reserves.

– The company spent 8 percent of its third quarter profit — or $149 million— buying back its own stock, which enriches the largest shareholders and executives.

– Conoco’s production is 1 percent lower than this time last year (1.525 million BOE per day vs. 1.538 million BOE per day in 2011)

– Conoco paid an 18 percent effective federal tax rate in 2011. This is nearly half of the 35 percent standard top corporate tax rate.

– ConocoPhillips’ former CEO James Mulva received $18.92 million in total compensation last year. Current CEO, Ryan Lance received over $5.9 million in compensation in 2011. He sits on the board of the American Petroleum Institute, the lobbying arm of the oil and gas industry.

BP will be the next of the Big Five oil companies to announce its 2012 third-quarter profit earnings on Tuesday, October 30, 2012.

In just over one month, wind manufacturers in the U.S. have announced layoffs of more than 1,130 workers around the country. The layoffs come in states such as Colorado, Florida, and Iowa that are considered “battlegrounds” in national elections.

Every company shedding employees has blamed the looming expiration of the production tax credit for wind, which is set to lapse at the end of this year.

The latest announcement comes from LM Wind Power, a manufacturer based in North Dakota. The company said yesterday that it will lay off lay off 345 workers because of lagging demand for product. The company also cited the production tax credit, which Congress has failed to extend past 2012.

“It is important to emphasize that the challenging situation in the U.S. wind market is not specific to LM Wind Power, nor to Grand Forks manufacturing facilities,” said the company in an announcement. “The whole sector is affected.”

So far this year, companies in Arkansas, Colorado, Florida, Iowa, Kansas, North Dakota, Ohio, and Pennsylvania have all cancelled projects or laid off workers. In the last month alone, more than 1,334 manufacturing workers have lost their jobs. That tally comes from individual announcements made by companies since late August.

The world’s largest wind manufacturer, Vestas Wind, says it may lay off 1,600 American workers in the next year if the production tax credit is not extended. That temporary credit offers owners of wind farms 2.2 cents for every kilowatt-hour of wind generated. The American Wind Energy Association says the credit has helped raise $20 billion in private investment over the last five years, supporting 75,000 jobs.

However, according to analysis from a prominent consulting firm, the wind industry could shed up to 37,000 jobs if the wind tax credit is not extended past 2012.

As the layoffs continue, extension of the credit has become a major issue in the presidential campaign. President Obama wants to extend the credit; Republican challenger Mitt Romney wants to end it. Romney’s stance has raised major concerns from fellow Republicans who live in states where wind has been a major economic driver. According to the American Wind Energy Association, 81 percent of wind projects are installed in Republican districts.

Some voters are also saying that wind will play a role in how they cast their votes in the November elections.

The fight over wind credits has also uncovered major contradictions in national energy policy. While Congress continues to stall on extending the temporary production tax credit, many politicians opposed to federal wind investments continue to support permanent tax credits for the fossil fuel industry.

Earlier this month, 47 House Republicans sent a letter to House Speaker John Boehner (who’s home state supports more than 5,000 wind jobs) asking him to kill the production tax credit for wind. Out of the 47 Republicans calling for an end the wind investments, 46 voted last year against closing tax loopholes that let oil companies collect $4 billion in annual government support.

The future of wind tax credits is still tied up in Congress as the clock runs down to extend the production tax credit for wind (PTC) expiring at the end of the year. This week, 47 House Republicans urged House Speaker John Boehner (R-OH) to let them expire.

Although GOP districts hold 81 percent of the nation’s wind power capacity, Republicans are deeply split on investing in wind (Mitt Romney, for example, drew criticism from fellow Republicans for opposing the PTC). Boehner’s home state supports up to 6,000 wind jobs.

The GOP remains less divided on issues favoring Big Oil.

Of the 47 Republicans asking Boehner to end the wind investments, 46 voted in March 2011 against closing tax loopholes that let Big Oil collect $4 billion in annual subsidies. The one outlier, GOP Rep. Richard Hanna, was a no-vote that day. According to OpenSecrets, these representatives have received a total $2.2 million from the oil and gas industry, in an election cycle where Republicans have collected 89 percent of the oil industry’s contributions. Republicans have maintained these tax breaks are “essential” to an industry posting record-breaking profits.

Yet their letter claims wind is too expensive for investment. An excerpt reads:

Today, when the U.S. is more than $15 trillion in debt and borrowing $0.40 of every dollar it spends, we cannot afford to borrow money to subsidize the operations of a politically preferred technology. In the case of wind, doing so would not only be costly to taxpayers but ultimately would hurt consumers by distorting energy markets.”

The letter’s arguments echoes Americans for Prosperity’s campaign to end PTC. The Koch-funded organization called wind tax credits “deplorable.”

The PTC allots wind farms to draw on the 2.2 cents per kilowatt hour of electricity they produce in the first decade of operation. The Associated Press recently compared wind investments to government support of shale gas, which existed for decades before today’s natural gas boom. The oil and gas industry has long taken advantage of these and other tax breaks — fought for and maintained by Republican allies — that outnumbered federal support for renewables in the first 15 years of available subsidies.

by Harald Heubaum, via The Carbon Brief

US presidential contender Mitt Romney recently said that, if elected, he would not extend the production tax credits (PTCs) that have helped grow the US domestic wind energy industry since the early 1990s. But does Romney’s claim that discontinuing PTCs is necessary to “level the playing field” for energy sources stand up? A recent study taking the long view of subsidies to energy sources suggests renewables have received only a fraction of the historical support given to their fossil fuel competitors.

Romney’s position on support for renewables has vacillated over the years. In 2003, when governor of Massachusetts, Romney drew on a state fund to provide subsidies to a select group of renewable energy companies. But, nine years on, Romney’s support for free markets over government intervention has apparently hardened. He blamed the failure of Solyndra, a solar cell manufacturer that benefited from stimulus spending only to file for bankruptcy last year, on the Obama government’s decision to pick “winners and losers”.

Romney’s new stance should come as no surprise. It chimes with the current US Republican enthusiasm for unfettered free markets. And it also echoes the criticisms of predominantly right-of-centre politicians around the world, who have claimed government support has given low-carbon technologies an unfair competitive advantage over established energy players.

But are they right? Do renewable energy subsidies distort the market? To answer these questions it helps to take a closer look at government involvement in energy markets over time. The US experience is particularly illustrative.

Mapping US fossil fuel subsidies

In a 2011 study of historical US energy subsidies published by DBL Investors, Nancy Pfund and Ben Healy analyse US federal government support for various energy industries during their formative years. For the coal industry this meant cheap land grants in the 19th century. For oil and gas it was tax incentives during the first half of the 20th century, followed by costs of regulation, civillian R&D and liability risk-shifting among others for nuclear power from the late 1940s. Finally, for modern renewables it was tax incentives from the early 1990s onward.

Drawing on government, academic and NGO sources, Pfund and Healy find that when the first 15 years of subsidy life are compared, government support for the oil, gas and nuclear industries as a percentage of inflation-adjusted federal spending far outweighed the support granted to renewables.

Taking a longer-term view and again adjusting for inflation, the authors find that between 1918 and 2009, the oil and gas industry received a cumulative $446.96 billion in subsidies compared to just $5.93 billion given to renewables in the years between 1994 and 2009. Meanwhile, the nuclear industry benefitted from a cumulative $185.38 billion in federal subsidies between 1947 and 1999.

Pfund and Healy conclude:

“[C]urrent renewable energy subsidies do not constitute an over-subsidized outlier when compared to the historical norm for emerging sources of energy. Rather … federal incentives for early fossil fuel production and the nascent nuclear industry were much more robust than the support provided to renewables today.”

The study doesn’t just highlight the advantage the federal government gave oil, gas and nuclear in the form of subsidies. It also shows that the government continued the financial support as these industries matured, arguably enshrining a market distortion.

Pfund and Healy uncover evidence of direct and indirect coal subsidies reaching back as far as 1789 when the US federal government enacted a tariff on imported coal. Coal is not included in the final total of subsidy amounts, however, due to a lack of reliable data reaching back to the industry’s formative years in the early 1800s.

But it’s clear that coal continues to receive subsidies more than 200 years after the height of the Industrial Revolution. The US Energy Information Administration tallied federal government subsidies to the coal industry at $3.17 billion in 2007.

Subsidies beyond the US

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by Brad Johnson

Freshman Sen. Scott Brown (R-MA), notorious for his close ties to the Koch brothers, doesn’t believe that oil companies get subsidies. Walking in an Independence Day parade in Plymouth, MA, the senator declared his allegiance to the oil industry, which receives $7 billion in subsidies a year:

BROWN: Oil companies don’t get subsidies. . . . I’m positive. They’re able to take deduction like every other business. If we’re going to reform the tax code, we should do that.

Watch the video from American Bridge:

Brown’s denial of oil subsidies is nothing new; he has similarly questioned the facts of climate change. Brown was forced to contribute to charity after the American Petroleum Institute ran radio and print ads supporting his position on tax breaks for big oil companies. Brown stands in opposition to the growing global movement to end fossil fuel subsidies.

Figure 1: Global fossil fuel subsidies in billions of dollars per country from National Geographic.

by Dana Nuccitelli, via Skeptical Science

The International Energy Agency (IEA) made headlines recently by concluding that fossil fuels received far more global subsidies than renewable energy in 2010. However, it appears that the IEA survey only included data from the countries with the largest fossil fuel subsidies, which are mainly developing countries whose economies largely depend on fossil fuel production.  National Geographic’s The Great Energy Challenge also includes fossil fuel subsidy data from developed countries (Figure 1), bringing the total global value close to $500 billion for 2010.

Bear in mind that exactly what is defined as a “subsidy” can be rather subjective, so these are just rough estimates.

It’s worth noting that this trend is changing.  For example, in the USA in 2011, fossil fuel subisidies in the form of tax breaks were down to $2.5 billion while renewable energy and energy efficiency programs received $16 billion in subsidies.  Even many developing countries like Iran (with the largest orange circle in Figure 1 at over $80 billion in 2010 fossil fuel subsidies) dramatically reducing their subsidizing of fossil fuels (in 2011 Iran’s subsidies were down to $20 to $30 billion).

Nevertheless, despite the movement in the right direction, global fossil fuel subsidies are still much higher than renewable energy subsidies, despite the fact that fossil fuels and associated technologies have been established for decades to centuries.  Fossil fuels also receive another massive subsidy which is rarely taken into account in these types of calculations – carbon emissions.

Social Cost of Carbon

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