Biden Budget Is Chance to Stop Paying Fossil Fuel Industry
President Biden is set to release his first detailed budget proposal. This blueprint for government spending is an enormous opportunity to eliminate handouts to the fossil fuel industry through the new American Jobs Plan and Executive Order on Tackling the Climate Crisis at Home and Abroad.
Here’s what the budget should eliminate: loopholes in federal laws and regulations that giveaway approximately $15 billion a year to the fossil fuel industry. In addition to bilking taxpayers, these giveaways saddle communities, and vast swaths of our economy with more than a trillion dollars in healthcare, property damage and other costs wrought by fossil fuel pollution and climate change.
The U.S. tax code contains all sorts of subsidies that it is beyond time to eliminate. Just a few examples of these outrageous and antiquated giveaways include:
The Intangible Drilling Costs Deduction: Created more than a century ago, this special loophole for the fossil fuel industry in the federal tax code allows independent oil and gas companies to immediately deduct all the costs of exploring for and developing an oil well. What’s the old adage? “When you’re in a hole, stop digging?” We are in a climate crisis. There’s no justification for promoting oil exploration this way—literally throwing money at it—at a time when we need to do everything in our power to transition to clean energy sources.
Percentage Depletion: Instead of allowing deductions based on the money invested in a well over its lifetime, this loophole allows fossil fuel companies to deduct 15 percent of their gross income from production. As a result, this loophole allows many independent oil and gas companies to regularly deduct more money than a well is worth. Again, enriching polluters.
Accelerated Amortization Geological and Geophysical Costs: This special fossil fuel industry loophole allows oil and gas companies to recover costs they have incurred in exploring for oil and gas reserves more quickly than they would otherwise.
The Biden Administration has set a goal of reaching net zero emissions no later than 2050. So it’s critical that this budget proposal calls upon Congress to eliminate these tax loopholes and a raft of other laws and agency practices that give away billions more to oil and gas and help create new sources of climate pollution. It is time to protect our health, communities, and precious natural areas from fossil fuel pollution and the ravages of climate change.
There are also several legislative proposals in the works by Members of Congress who are marshaling support for eliminating federal fossil fuel giveaways.
Most recently, Rep Katie Porter (D-Calif), Chair of the Natural Resources Committee’s Subcommittee on Oversight and Investigations asked oil industry executives to appear as witnesses for hearing on the “Misuse of Taxpayer Dollars and Corporate Welfare in the Oil and Gas Industry.” The CEOs failed to appear, and the hearing highlighted how much we need greater accountability for fossil fuel companies—especially those that received taxpayer bailout money during the COVID crisis, only to lay off workers and pay out stock dividends.
The pivotal report the International Energy Agency (IEA) issued recently confirms that it is time to stop investing in fossil fuels, which includes eliminating subsidies for the industry. That’s right: IEA—an international body established to protect energy supply globally—says this is necessary and common sense. It confirms that protecting the climate means shifting investments from fossil fuels to clean energy. And we need to do that now—starting with getting rid of these ancient, backward-looking handouts to the fossil fuel industry.
A Biden Budget that asks Congress and federal agencies to end federal fossil fuel giveaways will fuel change. It will help put the United States on the path toward zero emissions that is essential to stave off the worst impacts of climate change and set us on a path to a clean energy future.