Proposals to Reduce Fossil Fuel Subsidies

This fact sheet from the Environmental and Energy Study Institute details the scale of fossil fuel subsidies in the United States and examines legislative and administrative efforts to reduce or modify them, including the Biden-Harris Administration's FY 2024 budget and the Inflation Reduction Act.

• In 2022, fossil fuel subsidies in the United States reached $757 billion according to the International Monetary Fund. This total is composed of $3 billion in explicit subsidies and $754 billion in implicit subsidies, which represent negative externalities such as environmental degradation and negative health impacts.
• The federal government's financial relationship with the oil and gas industry shifted between 2016 and 2022. In FY 2016, tax revenues from petroleum and natural gas exceeded subsidies by $1.1 billion, but by FY 2022, subsidies exceeded revenue by $2.1 billion. Conversely, federal tax subsidies for coal fell from $1.9 billion in FY 2016 to $590 million in 2022.
• The Biden-Harris Administration's FY 2024 budget request proposes eliminating 13 fossil fuel tax preferences and credits, including the treatment of coal royalties as long-term capital gains and the tax credit for oil and natural gas from marginal wells. These changes, combined with modified taxation rules for the foreign income of U.S. oil and gas companies, would result in total savings of $96.9 billion over 10 years.
• While the U.S. pledged in 2021 to stop funding new fossil fuel projects abroad, it committed over $1.8 billion to such projects in 2023 through the U.S. Export-Import Bank and the U.S. International Development Finance Corporation (DFC). The DFC has a goal to achieve net-zero emissions from its investments in developing countries by 2040.
• The Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) provide significant funding for carbon management. The IRA provides $1.55 billion for methane emission reductions and modified the 45Q tax credit, offering $85 per ton for permanently stored carbon dioxide and $60 per ton for enhanced oil recovery (increasing to $180 and $130 respectively for direct air capture). The IIJA allocated $12 billion for carbon capture, utilization, and storage.

APA

Brind’Amour, M. (2024). 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-january-2024

Chicago

Brind’Amour, Molly. Proposals to Reduce Fossil Fuel Subsidies. Environmental and Energy Study Institute, 2024. https://www.eesi.org/papers/view/fact-sheet-proposals-to-reduce-fossil-fuel-subsidies-january-2024.

Wikipedia

{{cite report |last1=Brind’Amour |first1=Molly |title=Proposals to Reduce Fossil Fuel Subsidies |publisher=Environmental and Energy Study Institute |date=30 January 2024 |url=https://www.eesi.org/papers/view/fact-sheet-proposals-to-reduce-fossil-fuel-subsidies-january-2024 |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{brindamour2024proposals, author = {Brind’Amour, Molly}, title = {{Proposals to Reduce Fossil Fuel Subsidies}}, institution = {Environmental and Energy Study Institute}, year = {2024}, month = jan, url = {https://www.eesi.org/papers/view/fact-sheet-proposals-to-reduce-fossil-fuel-subsidies-january-2024}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }