Eliminating Tax Expenditures with Adverse Environmental Effects

This policy brief argues that the U.S. should eliminate or scale back federal tax expenditures that promote fossil fuel production and consumption—specifically those with annual revenue losses over $1 billion—to reduce the budget deficit and improve economic efficiency, though it notes these changes alone would have a small impact on greenhouse gas emissions.

• The U.S. federal tax code contains tax expenditures that increase greenhouse gas emissions by incentivizing the production and consumption of fossil fuels. The author identifies four specific expenditures with annual revenue losses exceeding $1 billion: the alternative fuel production credit, percentage depletion, expensing of exploration and development costs (which encourage domestic production), and the exemption of qualified parking expenses (which encourages automobile commuting).
• Reducing or eliminating these tax expenditures would benefit the budget deficit and economic efficiency while making tax law more environmentally friendly. However, such reforms would only have a small effect on greenhouse gas emissions and must be part of a larger strategy to combat climate change.

APA

World Resources Institute (n.d.). Eliminating Tax Expenditures with Adverse Environmental Effects. https://www.wri.org/research/eliminating-tax-expenditures-adverse-environmental-effects

Chicago

World Resources Institute. Eliminating Tax Expenditures with Adverse Environmental Effects. n.d. https://www.wri.org/research/eliminating-tax-expenditures-adverse-environmental-effects.

Wikipedia

{{cite report |author=World Resources Institute |title=Eliminating Tax Expenditures with Adverse Environmental Effects |url=https://www.wri.org/research/eliminating-tax-expenditures-adverse-environmental-effects |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendeliminating, author = {{World Resources Institute}}, title = {{Eliminating Tax Expenditures with Adverse Environmental Effects}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/eliminating-tax-expenditures-adverse-environmental-effects}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }