Fossil Fuel SubsidiesThe use of fossil fuels drives climate change. Unfortunately, the path to clean sources of electricity, heat, and transport is impeded by the continued government subsidization of fossil fuels. In our recent Scorecard measuring the US against other G7 countries on progress in eliminating fossil fuel subsidies, the US ranked last, spending over $26 billion a year to prop up fossil fuels. Fossil fuel subsidies waste money and come at the expense of public health, local communities, and the climate.

The US still provides subsidies for fossil fuel exploration, mining, production, and consumption. The US subsidizes more oil and gas production than all other G7 countries combined – nearly $15 billion USD a year, compared to $2 billion for the next highest country, Japan.

Subsidies come in a variety of forms: allowing royalty payments for companies to mine coal from public lands at far below market rates, for example (costing taxpayers more than $30 billion over the last 30 years). Additionally, nearly half of discovered, yet undeveloped, US oil is dependent on subsidies. As an example, in the Williston Basin of North Dakota, 59% of oil resources are subsidy dependent. In the Permian Basin of Texas, 40% of oil resources are subsidy dependent.

The first step to eliminate subsidies is to do a full accounting of those that exist. The US completed a subsidy “peer review” in 2016. While the official US report contained gaps, it did include a list of substantial subsidies in need of reform: $1.6 billion in subsidies for expensing of intangible drilling costs, $966 million in unnecessary write-offs for depletion of oil and gas wells, a domestic manufacturing deduction of $1.0 billion, along with many other subsidies. The next step is to eliminate subsidies: which will require action through Congress. It’s time for lawmakers to phase out government support for fossil fuel production, while ensuring a just transition for workers involved in these industries.