Buried Out of Sight: Uncovering Pennsylvania’s Hidden Fossil Fuel Subsidies

In the third edition of PennFuture’s Fossil Fuel Subsidy Report, the authors quantify Pennsylvania’s fossil fuel subsidies in a step-by-step analysis of three subsidy types. Part One reviews Forgone Revenues including the underpricing of government-owned resources, tax credits, and tax subsidies. Part 2 examines the Direct Spending of five state government agencies to understand how government spending on grants and subsidized loans contribute to fossil fuel subsidies. Finally, Part 3 dives into the Negative Externalities resulting from the unconventional shale gas industry, including everything from the industry’s imposition on public health to its damaging impact on climate change.

PennFuture utilized tax documents, news articles, and a great deal of supplemental data review, analysis, and interviews to identify more than 50 ways that the Commonwealth of Pennyslvania as well as local governments subsidize fossil fuels. Finding this information was challenging; the author's note that Pennsylvania’s fossil fuel subsidies are pernicious in part because they are buried out of sight and difficult to disentangle. This difficulty limited the precision and depth of analysis that was possible to do; it is likely that only some of the subsidies received by the industry were captured.  Further, in some cases where subsidies could be identified, quite a few ultimately not able to be quantified at all or to the degree desired due to a lack of available information; this problem alone warrants much more attention if the state it to be run more efficiently.

Despite these limitations, the items that could be quantified reveal that Pennsylvania provided $3.8 billion in fossil fuel subsidies in Fiscal Year 2019 by systematically disabling many of its standard tools for collecting tax revenues, allowing the industry to extract public resources at little to no charge, and awarding the industry grants and tax credits. Meanwhile, in the same time period, the industry imposed $11.1 billion worth external costs to the state and its residents.