Climate Forward
For
subscribers October 16, 2025
Coal, oil
and gas interests in the U.S. received more than $16 billion in subsidies in
2023, according to the Fossil Fuel Subsidy Tracker.
Oil, gas
and the tax code
By David
Gelles
All year,
the Trump administration and Republicans in Congress have been rolling back tax
credits for clean energy projects, part of a broad effort to stymie the growth
of wind, solar and electric vehicles.
Despite
this, as Rebecca Elliot wrote this week, renewable power development is booming
in the United States — for the moment, at least, as companies race to take
advantage of expiring federal tax credits.
When I
asked Energy Secretary Chris Wright about the administration’s moves to hold
back clean power at the Climate Forward event last month, he called those tax
credits “subsidies.” Renewables, Wright said, should compete with traditional
forms of energy on a level playing field.
“We did
have an effort to end subsidies,” he told me. “The wind subsidies and solar
subsidies are 33 years old. So it’s about time for industries to walk on their
own.”
That’s
the kind of economic logic that is used by many free-market proponents who
argue that the government shouldn’t pick winners and losers with support for
particular technologies.
But when
I asked Wright, a former fracking executive, about the government’s support for
fossil fuels, he said there was none.
“There
are not oil and gas subsidies,” he told me. “In the United States, oil and gas
and coal are huge taxpayers and don’t have any subsidies that I’m aware of. And
I’ve been in the business for 40 years. So if you can find the subsidies, tell
me where they are.”
But,
despite Wright’s claim, fossil fuel companies have benefited from specific
elements of the U.S. tax code for decades.
The tax
code and fossil fuels
Coal, oil
and gas interests in the U.S. received more than $16 billion in subsidies in
2023, according to the Fossil Fuel Subsidy Tracker, which is maintained by the
International Institute for Sustainable Development and the Organization for
Economic Cooperation and Development.
That
includes nearly $10 billion in subsidies for natural gas and more than $5
billion for petroleum, and is the highest total in the 15 years the group has
been monitoring the data.
The
subsidies vary by type and technology, but include provisions that allow
companies to deduct the costs associated with drilling new wells and incentives
for the production of certain types of coal.
“We
subsidize oil and gas through the tax code,” said Joseph Aldy, a professor at
the Kennedy School of Government at Harvard University, who served as a special
adviser to President Barack Obama on energy issues. “They have industry
specific tax preferences that increase the returns to investing in oil and gas
compared to other industries, and they’ve had that for more than a century.”
By some
estimates, the total figure is much higher. Oil Change International, an
activist group, puts the total government support for fossil fuels in the U.S.
at more than $34 billion per year.
The
Energy Department did not respond to a request for comment.
There are
differences in the ways in which renewables and fossil fuels are subsidized.
Clean energy development has largely benefited from tax credits. But many oil
and gas projects take advantage of tax preferences, which can reduce the
after-tax costs of investing in drilling for oil and gas, for example.
“It has
the same effect as a tax credit but you would not technically call it a tax
credit,” Aldy told me.
And as
the Trump administration has rolled back tax credits for clean energy over the
past nine months, it has simultaneously boosted its support for the fossil fuel
industries.
Last
month, the Energy Department announced it would invest $625 million into aging
coal plants, part of a coordinated effort by the administration to revive the
ailing coal industry.
The giant
policy bill passed by Republicans in Congress this summer includes numerous
additional perks for the fossil fuel industry. There is a 2.5 percent tax break
for U.S. production of metallurgical coal, mandates for the sale of oil and gas
leases on federal lands, and lower royalty rates for coal companies operating
on federal lands.
Oil
Change International estimates that the bill contained subsidies worth an
additional $4 billion per year for fossil fuel interests.
For
years, subsidies for fossil fuels have proved hard to kill. As my colleague
Lisa Friedman wrote last year, despite years of efforts by Democrats, most of
the tax credits and other incentives for coal, oil and gas endure.
Taxing
pollution
Subsidies
aside, some economists argue that fossil fuel companies should be taxed even
more than they already are because of the air pollution they create and their
contributions to climate change, a concept known as “negative externalities.”
A 2021
report from the Natural Resources Defense Council put the financial costs from
fossil fuel generated air pollution and climate change in the U.S. at more than
$820 billion annually.
But
unlike many countries around the world, the United States has not implemented a
carbon tax, and a plan to start taxing methane emissions was scrapped by
Congress earlier this year.
“We don’t
tax pollution at all in this country, but other countries do,” Aldy said. “It’s
a way to raise revenue. And it creates an incentive for these firms to reduce
their pollution.”
THE TRUMP
ADMINISTRATION
How FEMA
is forcing disaster-struck towns to fend for themselves
President
Trump’s vision for emergency management in the United States would transfer
responsibility for disaster recovery from the federal government to the states
in all but the largest catastrophes.
For many
places, it is already the reality.
The
Federal Emergency Management Agency has been delaying disaster declarations and
aid payments to communities, adding new hurdles to access some grant funds and
cutting off the flow of money intended to boost resilience and prevent future
disasters from causing so much damage.
Emergency
managers and elected officials across the country are adjusting to a system in
which they can no longer count on the sort of disaster aid they typically
expect from FEMA. They are figuring out how to prepare for future disasters
without key FEMA grants, raising private funds to replace federal aid and
turning to state governments to beef up their preparations. In some places,
volunteer disaster recovery squads have sprung up. — Scott Dance
“I’ve
been proud to be an American for this reason: We have, for so long, been a
steward for conservation. And now, practically overnight, that’s been shut off.
It’s really almost soul-crushing.”
— Joshua
Plotnik is the director of the Comparative Cognition for Conservation Lab at
Hunter College, City University of New York. His research into Asian elephant
cognition was primarily funded by the U.S. Fish and Wildlife Service. In
January, after President Trump’s executive order freezing foreign aid, his
funding was canceled. Read more.
NUMBER OF
THE DAY
$28
billion
Two weeks
into the government shutdown, the Trump administration has frozen or canceled
nearly $28 billion that had been reserved for more than 200 projects primarily
located in Democratic-led cities, congressional districts and states, according
to an analysis by The New York Times.
The
projects include new investments in clean energy, upgrades to the electric grid
and fixes to the nation’s transportation infrastructure, primarily in
Democratic strongholds, such as New York and California. Each of these
infrastructure projects had received federal aid, sometimes after officials
spent years pleading in Washington — only to see that money halted as President
Trump has looked to punish Democrats over the course of the fiscal stalemate. —
Tony Romm and Lazaro Gamio
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