Removing U.S. Fossil Fuel Subsidies: Priorities for Action and Data Needs

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The Biden Administration’s commitment to identify and remove fossil fuel subsidies (Section 209 in the January 27, 2021 Executive Order on Tackling the Climate Crisis at Home and Abroad) offers a great deal of promise.  Realizing the potential environmental gains implied by Section 209 will not be easy.  This paper provides an overview of the different mechanisms the government uses to transfer value to coal, oil, and natural gas fuel cycles, and why looking just at direct spending will miss critical subsidies.  Using this framework, the paper then highlights policy areas where subsidy reform, redirection, and transparency can leverage national efforts to transition the economy to a lower-carbon baseline.  Links to relevant source material are provided.

Implementing the changes suggested would help the US reach its greenhouse reduction goals under the Paris Agreement, save billions of dollars that could be deployed to support economic transition or other objectives, and establish improved data norms on key energy-related federal leasing and lending programs that would extend well beyond the current administration.