The Role of Fossil Fuel Subsidies in Preventing Action on the Climate Crisis

This document is the oral testimony of Peter Erickson, a senior scientist at the Stockholm Environment Institute, delivered on April 22, 2021, to the House Oversight and Government Reform Subcommittee on the Environment. Erickson argues that fossil fuel subsidies are inefficient, undermine climate action, and harm public health.

• Fossil fuel subsidies in the US are an inefficient tool for economic support and job creation. Research indicates that over 96% of the value of these subsidies flows directly into excess profits, exceeding the minimum investment hurdles required for profitability, meaning most of the value does not contribute to local jobs.
• Subsidies hinder climate action by increasing greenhouse gas emissions during periods of low oil and gas prices when companies would otherwise lack the incentive to drill. Additionally, the continued existence of these subsidies may signal to other nations that the US is not serious about its climate commitments. In 2016, the US committed alongside other G7 governments in Japan to eliminate fossil fuel subsidies by 2025.
• Fossil fuel subsidies indirectly contribute to public health issues through air and water pollution. In Appalachia, the cumulative health damages from the shale gas boom are found to outweigh the benefits of new employment. In the Eagle Ford basin in Texas, the burning of waste natural gas releases toxic and carcinogenic compounds, a practice that occurs more frequently in Hispanic neighborhoods than in non-Hispanic ones.
• Subsidies take various forms beyond direct payments, including tax code provisions like the percentage depletion allowance and the intangible drilling cost provision. Furthermore, inadequate fees charged to companies for retiring oil and gas wells have resulted in a public clean-up bill totaling hundreds of billions of dollars.

APA

Erickson, P. (2021). The Role of Fossil Fuel Subsidies in Preventing Action on the Climate Crisis. Stockholm Environment Institute. https://www.sei.org/features/fossil-fuel-subsidies-hearing/

Chicago

Erickson, Peter. The Role of Fossil Fuel Subsidies in Preventing Action on the Climate Crisis. Stockholm Environment Institute, 2021. https://www.sei.org/features/fossil-fuel-subsidies-hearing/.

Wikipedia

{{cite press release |last1=Erickson |first1=Peter |title=The Role of Fossil Fuel Subsidies in Preventing Action on the Climate Crisis |publisher=Stockholm Environment Institute |date=22 April 2021 |url=https://www.sei.org/features/fossil-fuel-subsidies-hearing/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{erickson2021role, author = {Erickson, Peter}, title = {{The Role of Fossil Fuel Subsidies in Preventing Action on the Climate Crisis}}, publisher = {Stockholm Environment Institute}, year = {2021}, month = apr, url = {https://www.sei.org/features/fossil-fuel-subsidies-hearing/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }