Author(s): Erickson, P., Down, A., Lazarus, M., Koplow, D.

Year: 2017

In: Nature Energy, online 2 October 2017

DOI: 10.1038/s41560-017-0009-8

Type: Journal article

Language:
English

Centre:
US

Link to SEI authors:

Effect of subsidies to fossil fuel companies on United States crude oil production

This study assesses the impact of major federal and state subsidies on US crude oil producers.

Countries in the G20 have committed to phase out ‘inefficient’ fossil fuel subsidies. However, there remains a limited understanding of how subsidy removal would affect fossil fuel investment returns and production, particularly for subsidies to producers.

This study finds that, at recent oil prices of USD 50 per barrel, tax preferences and other subsidies push nearly half of new, yet-to-be-developed oil investments into profitability, potentially increasing U.S. oil production by 17 billion barrels over the next few decades.

This oil, equivalent to 6 billion tonnes of CO2, could make up as much as 20% of U.S. oil production through 2050 under a carbon budget aimed at limiting warming to 2 °C. Our findings show that removal of tax incentives and other fossil fuel support policies could both fulfil G20 commitments and yield climate benefits.


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