The fossil fuel industry receives a whopping $20 billion subsidy annually, in the form of tax breaks and royalty relief. That is according to a new report, G20 subsidies to oil, gas and coal production, published by the group Oil Change International:
The federal subsidies to fossil fuel producers represent an increase of 35% over levels when President Obama took office in 2009, in spite of calls to remove several major subsidies in every budget that the Obama administration has sent to Congress. This uptick in subsidies reflects the substantial increase in oil and gas producing activities in the US during that time. The vast majority of US national and state subsidies, by both volume and number of subsidies, come in the form of tax breaks and royalty relief, rather than direct spending. Tax and royalty exemptions for oil and gas producers are among the largest federal subsidies for fossil fuel production in the United States.
Alex Doukas, the study co-author, notes that tax breaks are largely to compensate for the cost of new oil and gas exploration: “We’re subsidizing companies to search for new fossil fuel reserves at time when we know that three-quarters of the proven reserves have to stay in the ground if we hope to avoid the worst impacts of climate change,”