Congress recently approved a sweeping budget measure that includes deep reductions in clean energy tax incentives as part of an effort to curb federal expenditures. President Donald Trump, declaring it a win, signed the “Big Beautiful Bill” into law on July 4.
Using public funds to support specific industries can distort the effectiveness and logic of a free market. So, the logical question is: why weren’t fossil fuel subsidies also cut in the BBB? Ending these subsidies could offer considerable savings to the federal budget.
Every year, the U.S. government spends an estimated $10 billion to $15 billion on the fossil fuel sector through tax breaks, direct funding via federal programs and infrastructure, and heavily discounted leases on public lands. This preferential treatment is often labeled “corporate welfare.”
These subsidies cost taxpayers twice – once through direct financial support and again through increased environmental damage and health impacts caused by pollution and greenhouse gas emissions. Essentially, taxpayers are footing the bill while large oil, gas and coal companies benefit.
The BBB did not just maintain these subsidies – it expanded them. It rolled back royalty rates for drilling on public land to levels from the 1920s, introduced new tax incentives for intangible drilling and development expenses, boosted the value of credits for using carbon dioxide to enhance oil extraction, delayed implementation of fees for methane waste, and adopted noncompetitive leasing rules, allowing fossil fuel companies to secure access to public resources at minimal cost.
Coal also received new financial support. The bill reduced royalty payments on public lands from 12.5% down to a maximum of 7% for both current and future leases. It also introduced a 2.5% tax deduction for mining metallurgical coal – a move hard to justify from a pro-America standpoint since most of this coal is exported, mainly to China and India, where it is used in producing carbon-heavy steel that undercuts cleaner American steel in the global market.
Cutting pollution leads to healthier populations and lower public health and disaster recovery costs. It is inconsistent to provide financial aid to companies that contribute to environmental harm while slashing support for clean energy alternatives like wind and solar, which have far fewer negative impacts.
There is a strong argument to be made for eliminating all energy subsidies – whether for fossil fuels, nuclear, or renewables. Doing so would foster a more open, competitive, and transparent energy sector. Subsidies warp prices, protect outdated technologies, and waste public money.
While subsidies can play a role in helping new industries grow, maintaining them long-term can entrench political bias, block innovation and impose unnecessary costs on taxpayers. A market without subsidies would allow energy sources to compete based on cost, reliability, and sustainability – not political favoritism. As wind and solar energy have demonstrated, even without subsidies these renewable power sources are competitive with power from gas and coal.
Removing subsidies could lead to federal savings and spur smarter, more efficient energy investments driven by actual demand. The government’s job is not to pick winners and losers, but to let the free competitive market decide best energy sources, based on supply, demand and cost. Consumers tend to favor environmentally friendly choices, especially when prices are equivalent.
Favoring some industries with government support – especially fossil fuels – while withdrawing help from others – like renewables – drives up energy costs for the public. Ending these handouts to some of the wealthiest and oldest sectors of the U.S. economy could reduce the national deficit without slashing crucial services, while freeing up resources for more positively impactful investments.
Eliminating subsidies is economically sound, though politically challenging. However, consistent, and collective citizen action can help change that.
Reach out to your representatives and urge them to phase out all energy subsidies – not just those for clean power.
Susan Atkinson volunteers with the local Citizens’ Climate Lobby Durango chapter.
