Why are there still fossil fuel subsidies in the reconciliation bill?

  • Published on August 31st, 2021

In a Monday letter to party leadership, dozens of Democrats in the U.S. House of Representatives called for repealing fossil fuel industry subsidies in the reconciliation bill that lawmakers are now working on after approving the budget blueprint last week.

Why are there still fossil fuel subsidies in the reconciliation bill?By Jessica Corbett
Common Dreams

The demand for the evolving Build Back Better Act was spearheaded by Reps. Ro Khanna (D-Calif.), Ilhan Omar (D-Minn.), Carolyn Maloney (D-N.Y.), chair of the House Committee on Oversight and Reform, and backed by 51 additional Democrats. Their letter (pdf) was addressed to House Speaker Nancy Pelosi (D-Calif.) and Majority Leader Steny Hoyer (D-Md.) but also sent to other key committee leaders.

The message to Democratic leaders follows party infighting that preceded the House’s passage of the Senate-approved budget resolution that enables members of Congress to begin crafting the $3.5 trillion package. The Hill reports that “business lobbyists are increasingly optimistic that they can water down tax hikes and other measures” in the final bill, which Democrats plan to pass without any GOP support.

The letter highlights that in his fiscal year 2022 budget, President Joe Biden “committed to the inclusion of $121 billion in revenue raised from repealing fossil fuel subsidies, which includes $86 billion from tax breaks for foreign oil and gas income.”

“We are greatly appreciative of the president’s focus on repealing these harmful and wasteful subsidies,” the letter says. “We support a deal that sufficiently enhances climate justice, especially in repealing fossil fuel subsidies. Congress must follow through in implementing the president’s vision.”

Citing findings from the International Monetary Fund and the advocacy group Oil Change International, the letter points out that the U.S. ranks second in the world for supporting gas and oil companies, and “federal and state governments give the fossil fuel industry over $20.5 billion in support each year through the tax code, inadequate royalty rates, and direct funding.”

The lawmakers argue that “fossil fuel subsidies should be repealed because, instead of enhancing American energy independence or creating jobs, they simply enhance the profits of fossil fuel companies,” noting research (pdf) from the Stockholm Environment Institute.

Such subsidies “are a bad deal for American taxpayers,” the Democrats assert, pointing to impacts on public health, infrastructure, and extreme weather exacerbated by global heating. They also emphasize warnings from the United Nations Intergovernmental Panel on Climate Change about the necessity of rapidly and dramatically reducing planet-heating emissions and ending government giveaways to polluters.

“Curbing subsidies for this industry would also advance racial justice. Black and Brown communities are disproportionately affected by fossil fuel pollution,” the letter says. The lawmakers further note that despite claiming at least $8.2 billion in coronavirus pandemic relief funds last year, the industry laid off 16% of its workforce—and “fossil fuel jobs are dangerous.”

“For these reasons,” the House Democrats concluded, “we implore you to include the repeal of fossil fuel subsidies in the Build Back Better Act.”

The letter comes after more than 500 groups made similar demands of Democratic leadership earlier this summer. In addition to sending a letter, the organizations rallied outside the U.S. Capitol—joined by multiple lawmakers, including Khanna and Omar.

Omar and Sen. Bernie Sanders (I-Vt.) are the lead sponsors of the End Polluter Welfare Act (H.R. 2102/S. 1167). Reintroduced this spring, the bill aims to close tax loopholes and eliminate federal subsidies for fossil fuel companies.

“Providing corporate giveaways during a time of widespread suffering to fossil-fuel companies is unconscionable,” Omar said at the time. “Our resources should go to helping the American people get through this crisis—not providing giveaways to the very people responsible for polluting our water and lands. We should be fighting for a greener, more equitable future for all instead of making the fossil fuel industry more profitable.”

This post has been updated with a tweet from Friends of the Earth Action.


(Originally appeared at Common Dreams. Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.)




About the Author

Jessica Corbett is a staff writer for Common Dreams.