Researchers have revealed that the U.S. government doles out over $30 billion in funding to support the fossil fuel industry every year.
What’s happening?
First reported by the Guardian, eye-popping amounts of government subsidies to the fossil fuel industry have continued to rise over the last several years. This is despite advancements in renewable energy technology and increased awareness of the detrimental impacts of carbon emissions on our planet.
In a recent analysis conducted by Oil Change International, researchers determined that fossil fuel firms receive around $31 billion in U.S. subsidies each year. This is more than double what firms received in 2017. The massive amount of money being funneled into the sector has raised several concerns.
As the environmental group noted, fossil fuel subsidies are government actions that financially support the production or consumption of coal, oil, and natural gas. These actions can include tax breaks, direct payments, or price controls that artificially lower the cost of fossil fuels.
Why are increasing fossil fuel subsidies important?
While fossil fuel subsidies can provide some relief to consumers, the bulk of the money mostly benefits the largest producers. In 2024, major fossil fuel companies ExxonMobil, Chevron, BP, Shell, and TotalEnergies collectively earned over $100 billion in profits.
“These subsidies allow for new production that would not otherwise occur,” said Collin Rees, U.S. program manager at Oil Change International and lead author of the analysis. “They also, to an enormous extent, go to lining the pockets of shareholders and investors and fossil fuel executives.”
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The burning of fossil fuels releases carbon dioxide and other gases that can trap heat in our atmosphere, leading to a sharp increase in global temperatures. This can result in an uptick in extreme weather events and rising sea levels. The extraction process can also contaminate groundwater, while air pollutants can contribute to the formation of acid rain, smog, and poor air quality.
What’s being done about fossil fuel subsidies in the U.S.?
Reducing our reliance on fossil fuels can start with a large-scale transition to renewable energy sources such as solar and wind, which can improve energy efficiency in homes and transportation, and encourage policies that promote widespread electric vehicle adoption.
Other strategies include reforming government policies, such as ending fossil fuel subsidies or implementing carbon taxes. However, as Rees explained, this could involve a substantial shift in priorities for the country and its lawmakers.
“We’re dealing with technical legislative language and components of the tax code, but despite that, I think it’s important to understand that subsidies are political statements,” Rees added. “They are political choices about what we’re choosing to support as a country.”
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