Proposals to Reduce Fossil Fuel Subsidies (2021)

The document details U.S. fossil fuel subsidies, estimated at $20.5 billion in direct annual costs and $649 billion when including externalities. It outlines administrative efforts under President Biden to eliminate these subsidies through the repeal of 13 tax preferences, the pausing of new public land leases, and the redirection of Department of Energy R&D funding toward climate-centric activities. Additionally, it lists several bills from the 117th Congress aimed at reforming tax subsidies and updating royalty rates.

• Direct U.S. subsidies to the fossil fuel industry are estimated at approximately $20.5 billion annually, consisting of $14.7 billion from federal and $5.8 billion from state sources. When health, environmental, and climate externalities are included, the total estimated subsidy is $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 could be raised by reforming the taxation of foreign fossil fuel income.
• The U.S. government subsidizes the industry through low royalty rates and inexpensive leases on public lands; the onshore royalty rate has been 12.5 percent since 1920 and lease prices have remained at $2 per acre since 1987. Increasing the onshore royalty rate to 18.75 percent for new parcels would raise $200 million in federal revenue over ten years.
• The Department of Energy (DOE) is shifting its R&D focus from fossil combustion to climate-centric activities. This includes increasing funding for the Office of Fossil Energy and Carbon Management from $750 million to $890 million to focus on carbon capture, clean hydrogen, and methane reduction, while zeroing out $71 million for Unconventional Fossil Energy Technologies and Gas Hydrates programs.
• Between 2015 and 2020, the U.S. provided over $13 billion for overseas fossil fuel projects through the Export-Import Bank (EXIM), the Overseas Private Investment Corporation (OPIC), and the U.S. International Development Finance Corporation (DFC). The DFC has since committed to a net-zero emissions portfolio by 2040.
• The 117th Congress proposed several bills to reform subsidies: the End Polluter Welfare Act of 2021 (H.R.2102/S.1167) to eliminate tax subsidies and update royalty rates; the End Oil and Gas Tax Subsidies Act of 2021 (H.R.2184) to eliminate 11 tax subsidies; the Ending Taxpayer Welfare for Oil and Gas Companies Act of 2021 (H.R.1517) to raise onshore royalty rates to 18.75 percent and minimum bids to $5 per acre; and the Clean Energy for America Act (S.1298) to eliminate tax incentives and provide clean electricity credits.

APA

Bertrand, S. (2021). Proposals to Reduce Fossil Fuel Subsidies (2021). Environmental and Energy Study Institute. https://www.eesi.org/files/FactSheet_Fossil_Fuel_Subsidies_2021.pdf

Chicago

Bertrand, Savannah. Proposals to Reduce Fossil Fuel Subsidies (2021). Environmental and Energy Study Institute, 2021. https://www.eesi.org/files/FactSheet_Fossil_Fuel_Subsidies_2021.pdf.

Wikipedia

{{cite report |last1=Bertrand |first1=Savannah |title=Proposals to Reduce Fossil Fuel Subsidies (2021) |publisher=Environmental and Energy Study Institute |date=July 2021 |url=https://www.eesi.org/files/FactSheet_Fossil_Fuel_Subsidies_2021.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bertrand2021proposals, author = {Bertrand, Savannah}, title = {{Proposals to Reduce Fossil Fuel Subsidies (2021)}}, institution = {Environmental and Energy Study Institute}, year = {2021}, month = jul, url = {https://www.eesi.org/files/FactSheet_Fossil_Fuel_Subsidies_2021.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }