Congress: Stop Subsidizing Fossil Fuel Pollution
As Congress works on a much-needed clean energy package, it is a no-brainer to eliminate antiquated and costly subsidies to the fossil fuel industry.
As Congress works on a much-needed clean energy package, it is a no-brainer to eliminate antiquated and costly subsidies to the fossil fuel industry. Legislation passed this week by the House Ways and Means Committee would eliminate a key loophole that allows companies that drill overseas to escape taxes. It would also force oil and gas companies to pay for the damage they cause and would establish and extend important tax provisions to advance clean energy.
To fully invest in a clean future, however, the U.S. Senate should eliminate a raft of additional tax giveaways to the oil and gas industry that fuel harmful pollution in our communities. Senator Ron Wyden’s (D-OR) Clean Energy for America Act would end the largest of these polluting ‘fossil fuel freebies.’ The U.S. Senate should ensure these proposals are included in final reconciliation legislation,
Not only do fossil fuel subsidies mean that taxpayers are supporting elevated profits for oil and gas companies, it means that we are supporting pollution that devastates community health and our climate. For decades, America has committed to get rid of these costly subsidies to a dirty industry. With the impacts of climate change harming our communities with floods, fires and dangerous storms, it is beyond time to take this simple step.
Eliminating fossil fuel subsidies is a “revenue raiser.” It will generate an additional $160 billion in revenue for critical public priorities that lawmakers want to fund. The absence of these subsidies would mean fewer oil and gas wells drilled across the United States, protecting millions from pollution. Ending special giveaways to the fossil fuel industry will help fight climate change, reducing emissions that fuel global warming. We can and are already doing better. Wind, solar and energy efficiency are building a clean energy economy that should not be dragged down by hand-outs to an industry whose place is in the past.
There are a number of critical international fossil fuel subsidies that must be eliminated. As important are the subsidies given to the oil and gas industry here at home. These are the top oil and gas polluter giveaways in the United States that Congress should eliminate:
1. Repeal Expensing of Intangible Drilling Costs: Created by Congress more than a century ago, this special tax giveaway allows oil companies to deduct costs for developing an oil and gas well or a mine faster than they otherwise would be able to. This incentive for drilling increases the threat of oil and gas exploration to local communities and increases climate pollution. President Biden’s FY 22 Budget estimates that this deduction will cost taxpayers approximately $10.5 billion over the next ten years if not eliminated.
2. Repeal Percentage Depletion for Oil and Natural Gas Wells: This giveaway allows oil, gas, and coal companies to deduct a flat percentage of the income they generate from a well or mine instead of deducting a percentage of the value of the well or mine itself. Essentially, it means that taxpayers pay oil companies to drill. President Biden’s FY 22 Budget estimates this deduction will cost taxpayers approximately $10.3 billion over the next ten years if not eliminated.
3. Reinstate Expired Superfund excise tax on crude oil, petroleum products and untaxed crude oil. Three Superfund excise taxes need to be reinstated at double the previous rates: (1) crude oil received at a U.S. refinery; (2) imported petroleum products (including crude oil) entered into the United States for consumption, use, or warehousing; and (3) any domestically produced crude oil that is used in or exported from the United States if, before such use or exportation, no taxes were imposed on the crude oil. The Joint Committee on Taxation estimates that ending this giveaway will generate $38 billion over ten years.
There is strong support across America for investing in clean energy and divesting from dirty energy. That includes the most basic step of eliminating hand-outs to the fossil fuel industry. There is no reason to wait to take this step. Elimination of fossil fuel subsidies needs to be part of the 2021 changes to the tax code if we are to make progress in protecting our communities from climate change and building a stronger America that runs on clean energy.