US Fossil-Fuel Subsidies Double to $31bn, Report Warns of Climate Crisis Risks

By Andrew Haruna | The Bureau News

The United States is channeling nearly $31 billion annually into subsidies for the fossil-fuel industry, according to a new analysis by Oil Change International. The figure represents more than double the amount recorded in 2017 and could be a conservative estimate due to limited transparency in government data.

Subsidies Undermining Climate Action

The report warns that these subsidies are a “massive barrier” to decarbonization, a step climate experts insist is critical to averting the worst effects of the climate crisis.

“These subsidies allow for new production that would not otherwise occur,” said Collin Rees, US program manager at Oil Change International and the report’s lead author. “They also, to an enormous extent, go to lining the pockets of shareholders, investors, and fossil-fuel executives.”

The Bureau News learned that the analysis examined tax breaks, reduced rates for land and resource acquisition, direct appropriations, and other forms of government support using the World Trade Organization’s definition of fossil-fuel subsidies.

The report concludes that US subsidies enable oil and gas companies to earn returns of up to 30,000% on investments.

Key Subsidy Mechanisms

Among the most significant supports are:

• A federal tax rule allowing corporations to offset foreign taxes and royalties against domestic tax bills.

• A carbon capture tax credit, intended as a climate solution but widely used for enhanced oil recovery to extract harder-to-reach reserves.

The US is also criticized for moving “in the wrong direction.” A tax-and-spend bill signed into law in July by former President Donald Trump could hand fossil-fuel companies an additional $4 billion annually for the next decade, thanks to expanded carbon capture credits and lowered royalty rates on public lands.

Another provision reportedly allows oil companies to bypass the corporate minimum tax introduced under President Joe Biden.

Global Context and Biden’s Pledge

Between 2015 and 2020, at least 53 countries reformed fossil-fuel subsidies, according to the Global Subsidies Initiative. Biden, upon taking office in 2021, pledged to eliminate handouts to the oil sector, declaring:

“Unlike previous administrations, I don’t think the federal government should give handouts to big oil.”

Despite that promise, the latest findings suggest the US is expanding support for the fossil-fuel industry rather than winding it down.

Redirecting Subsidies to Social Programs

The Oil Change International report argues that redirecting subsidies could transform lives. Possible alternatives include:

• Providing 3 million families with SNAP benefits annually.

• Helping 54 million households install solar panels within a decade.

• Funding Head Start early learning programs for 3 million children.

Rees emphasized that while the subsidies may appear buried in technical tax code language, they are fundamentally political choices about national priorities.

For more on global energy policy and Nigeria News Today, visit The Bureau News energy and environment section or see Reuters climate reports.