Which energy source is the most subsidized in the United States?


As the U.S. economy continues to recover from covid-19 and associated disruptions, there is a sense that this moment represents a key opportunity to rethink how the economy works.

The 2020 and 2021 restrictions have largely been lifted, and as the industry restarts there is more focus on where that power is coming from. The question of the “green economy” was at the center of President Biden’s concerns Building back better proposals that failed to gain traction in the Senate last year.

The $1.75 trillion package would have provided hundreds of billions of dollars to boost renewable energy production and consumption over the next decade, but those proposals have yet to come to fruition.

Fuel subsidies play a major role in energy production, and a report released by the Congressional Budget Office in 2017 shows that the focus has already been on switching to renewables. These data show that the $18.4 billion in annual government allocation of energy-related tax preferences can be divided into:

– Renewable energy – 59%

– Fossil fuels – 25%

Energy efficiency – 15%

Nuclear energy – 1%

Fossil fuels still receive massive government subsidies

However, while renewables now receive the most subsidies, the fossil fuel industry is still clamoring for a huge amount of taxpayer money to help keep their prices low. The Environmental and Energy Study Institute found that only the U.S. government spends $20 billion each year in direct fossil fuel subsidies. Of this figure, about $16 billion goes to oil and gas, while the remaining $4 billion benefits the coal industry.

There is also data to suggest that the problem is getting worse rather than better. Between 2017 and 2019 fossil fuel production subsidies increased by 28%.

The United States is certainly a culprit, spending huge sums to support fossil fuel companies, but is far from the only country spending billions of taxpayer dollars to support the industry.

Last year, a Brookings Institute report found that more than the world governments spend over $500 billion on fossil fuel subsidiesartificially lowering the cost of non-renewable energy and slowing the transition to more sustainable sources.

A 2021 estimate revealed that the G20, a group of twenty nations with the largest economies in the world, were responsible for 80% of global greenhouse gas emissions. Despite this, fossil fuel production subsidies among G20 countries remain high and averaged around $290 billion per year between 2017 and 2019.

Of this amount, nearly 95% goes to the oil and gas industries.

Countless G20 summits have attempted to reduce the level of government support offered to the fossil fuel industry, but the disruptions of recent years have sidelined such long-term thinking in favor of short-term savings.


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