The U.S. cut financing for fossil fuel abroad. Now how about at home?

At the recent global climate conference in Glasgow (COP26), the United States joined other countries in committing to ending most new financing of fossil fuel projects abroad. 

It was disheartening, then, that just after the end of COP26, the U.S. held an auction for new fossil fuel development leases in an area in the Gulf of Mexico twice the size of Florida. 

Ending investment in fossil fuels abroad is an important move. But fighting global warming requires ending support for fossil fuel development at home. And leasing public lands and waters for development is only one of the many ways America is currently supporting and incentivizing production and use of climate-destroying fossil fuels.

The U.S. spends about $20 billion of taxpayer money on direct subsidies to the fossil fuel industry each year, and incurs many more billions in lost revenue from tax breaks. Including the costs of the environmental and public health damage from fossil fuels – costs that are currently borne by the public – those subsidies balloon to nearly $650 billion per year. Given that the six largest oil and gas companies posted a combined profit of $55 billion in 2019, it seems clear that governmental support for fossil fuels is a major factor in their success. 

Subsidies for the fossil fuel industry in the U.S. take many forms. From tax breaks and royalty relief to credits, accounting exemptions, and research grants to study new fossil fuel technology, the federal government props up the industry every step of the way. Oil and gas companies are even skipping out on the costs of cleaning up the wells that they abandon, leaving taxpayers on the hook for hundreds of billions of dollars.

So, while the Biden administration should be commended for its commitment to cut fossil fuel financing abroad, that commitment needs to be strengthened, and it needs to be followed by the end of domestic financing for oil, coal and gas, which are the primary drivers of climate change. 

The federal government can follow one good step with another by making good on President Biden’s call to end domestic fossil fuel subsidies. Doing so will be more difficult than making promises to the international community, but it will be more meaningful, and signal a true embrace of a carbon-free future.

Fire boat crews fight the flames on the remains of the Deepwater Horizon oil rig in April 2010. Credit: U.S. Coast Guard via Flickr, CC BY-NC-ND 2.0.