trillion with a “t”
We are climate tech venture capitalists—we invest where technology can transition the world’s resources from finite to infinite. We see opportunity in the decoupling of economic growth from environmental degradation. We believe in markets—in capitalism. So we have to question whether it is fundamentally non capitalistic to subsidize oil and gas to the tune of over one TRILLION USD during their most profitable year ever.
We understand the merit of and celebrate industry profits. Prices went up during a time of lessened global supply and demand remained high. Take climate change out of the equation and it makes perfect economic sense. Last year the largest oil and gas companies made $219B in profit and paid out $110B in dividends and share buybacks. So why is it that during 2022’s record-breaking profits did subsidies (including tax breaks) double … and increase 5X from 2020?
At the same time, many of the largest oil companies reversed their pledges to cut production, transition to renewables and decarbonize. The surge in profits has removed the incentives for the industry to make a clean energy transition. Government subsidies are supposed to be the lever that creates incentives aligned with the public good—not inflating the profits of an entrenched industry whose interests are in conflict with a habitable planet.
What could be further from free market capitalism AND contrary to social/environmental welfare than subsidizing fossil fuel companies during their most profitable period … while at the same time incentivizing those companies to reduce their role in the clean energy transition? Did all that make your brain spin? Us too, because it’s nuts.
