Fact Sheet Proposals to Reduce Fossil Fuel Subsidies

In 2022, U.S. fossil fuel subsidies totaled $757 billion, including $754 billion in implicit costs. While the Biden-Harris FY 2024 budget proposes eliminating 13 tax preferences to save $96.9 billion, other legislation like the Inflation Reduction Act continues to provide subsidies, including $1.55 billion for methane reductions and credits for carbon sequestration.

• In 2022, total fossil fuel subsidies in the United States reached $757 billion, consisting of $3 billion in explicit subsidies and $754 billion in implicit subsidies, the latter representing societal costs such as environmental degradation and negative health impacts.
• The federal government's financial position regarding natural gas and petroleum shifted from a surplus of $1.1 billion in FY 2016 to a net loss where subsidies exceeded revenue by $2.1 billion in FY 2022. Conversely, federal tax subsidies for coal fell from $1.9 billion in FY 2016 to $590 million in 2022.
• Despite a 2021 pledge to stop funding new fossil fuel projects abroad and a DFC goal of net-zero emissions from developing country investments by 2040, the U.S. committed over $1.8 billion to overseas fossil fuel projects in 2023 through the U.S. Export-Import Bank and the DFC.
• The Biden-Harris Administration's FY 2024 budget request proposes eliminating 13 fossil fuel tax preferences and credits, including those for marginal wells and coal royalties, which would reduce the federal deficit by nearly $31 billion. Combined with proposed changes to taxation rules for foreign income of U.S. oil and gas companies, total savings would reach $96.9 billion.
• The Inflation Reduction Act (IRA) provides subsidies to fossil fuel companies, including $1.55 billion for methane emission reductions and the 45Q tax credit for carbon dioxide sequestration. The 45Q credit offers $85 per ton for permanent storage and $60 per ton for enhanced oil recovery, with higher rates of $180 and $130 respectively for direct air capture projects.

APA

Environmental and Energy Study Institute (2024). Fact Sheet Proposals to Reduce Fossil Fuel Subsidies. https://www.eesi.org/files/FactSheet_Fossil_Fuel_Subsidies_2024.pdf

Chicago

Environmental and Energy Study Institute. Fact Sheet Proposals to Reduce Fossil Fuel Subsidies. 2024. https://www.eesi.org/files/FactSheet_Fossil_Fuel_Subsidies_2024.pdf.

Wikipedia

{{cite report |author=Environmental and Energy Study Institute |title=Fact Sheet Proposals to Reduce Fossil Fuel Subsidies |date=January 2024 |url=https://www.eesi.org/files/FactSheet_Fossil_Fuel_Subsidies_2024.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{environmentalandenergystudyinstitute2024fact, author = {{Environmental and Energy Study Institute}}, title = {{Fact Sheet Proposals to Reduce Fossil Fuel Subsidies}}, institution = {Environmental and Energy Study Institute}, year = {2024}, month = jan, url = {https://www.eesi.org/files/FactSheet_Fossil_Fuel_Subsidies_2024.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }