Proposals to Reduce Fossil Fuel Subsidies

The document details the scale of U.S. fossil fuel subsidies, including direct federal and state funding and the impact of externalities. It reviews President Biden's Executive Order 14008 and the FY2022 budget proposal, which aim to eliminate tax preferences, reform foreign fossil fuel income taxation, and adjust royalty rates on public lands. It also addresses the shift in Department of Energy R&D funding and the goal of ending international financing for carbon-intensive energy through agencies like the DFC and EXIM.

• Direct U.S. subsidies to the fossil fuel industry are approximately $20.5 billion annually, consisting of $14.7 billion from federal sources and $5.8 billion from state sources. When health, environmental, and climate externalities are factored in, the total estimated subsidy reaches $649 billion per year.
• The Biden-Harris Administration's FY2022 budget proposal aims to eliminate fossil fuel subsidies by repealing 13 tax preferences, which is projected to increase federal revenue by $35 billion over 10 years. An additional $86 billion over the same period could be raised by reforming the taxation of foreign fossil fuel income.
• Fossil fuel extraction from public lands is subsidized via low royalty rates and inexpensive leases. The onshore royalty rate has been 12.5 percent since 1920, and lease prices have remained at $2 per acre since 1987. The Congressional Budget Office suggests that raising the onshore royalty rate to 18.75 percent for new parcels would generate $200 million in federal revenue over ten years.
• The U.S. government has provided significant funding for overseas fossil fuel projects; between 2015 and 2020, the Export-Import Bank (EXIM), the U.S. International Development Finance Corporation (DFC), and the Overseas Private Investment Corporation (OPIC) provided over $13 billion. The DFC has committed to reaching net-zero emissions in its portfolio by 2040.
• Historically, the Department of Energy (DOE) allocated 24 percent of its research and development (R&D) budget to fossil energy between 1978 and 2018. Executive Order 14008 and the FY2022 DOE budget request seek to eliminate these direct subsidies by reprioritizing or removing funding for specific programs.

APA

Bertrand, S. (2021). Proposals to Reduce Fossil Fuel Subsidies. Environmental and Energy Study Institute. https://www.eesi.org/papers/view/fact-sheet-proposals-to-reduce-fossil-fuel-subsidies-2021

Chicago

Bertrand, Savannah. Proposals to Reduce Fossil Fuel Subsidies. Environmental and Energy Study Institute, 2021. https://www.eesi.org/papers/view/fact-sheet-proposals-to-reduce-fossil-fuel-subsidies-2021.

Wikipedia

{{cite report |last1=Bertrand |first1=Savannah |title=Proposals to Reduce Fossil Fuel Subsidies |publisher=Environmental and Energy Study Institute |date=23 July 2021 |url=https://www.eesi.org/papers/view/fact-sheet-proposals-to-reduce-fossil-fuel-subsidies-2021 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bertrand2021proposals, author = {Bertrand, Savannah}, title = {{Proposals to Reduce Fossil Fuel Subsidies}}, institution = {Environmental and Energy Study Institute}, year = {2021}, month = jul, url = {https://www.eesi.org/papers/view/fact-sheet-proposals-to-reduce-fossil-fuel-subsidies-2021}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }