Why Are We Still Subsidizing Fossil Fuels?
Key Insights
Global fossil fuel subsidies exceeded $1 trillion in 2022, with implicit subsidies pushing the total to $7 trillion annually, undermining clean energy progress.
The U.S. Senate is debating a bill that would cut clean energy incentives while maintaining fossil fuel subsidies, despite renewables being the cheapest energy source.
Conservative arguments for fossil fuel dominance ignore historical subsidies and the economic viability of wind and solar, which now outcompete hydrocarbons.
Internal lobbying documents reveal fossil fuel groups actively shaping policy to delay climate protections and maintain subsidies, despite environmental and economic costs.
The global fossil fuel industry continues to benefit from staggering subsidies, with explicit and implicit support totaling $7 trillion in 2022, according to the International Monetary Fund. This financial backing persists even as renewable energy technologies like wind and solar have become the cheapest sources of new electricity generation. In the U.S., the Senate is currently deliberating a bill that would slash incentives for clean energy while preserving subsidies for fossil fuels, a move critics argue distorts the market and delays the energy transition.
Conservative rhetoric often frames fossil fuels as free-market champions, but historical data reveals a century of government support for oil and gas. For example, U.S. direct subsidies for fossil fuels averaged $4.8 billion annually (adjusted for inflation) over the past century, while nuclear energy received similar backing. Meanwhile, renewable energy advocates highlight that wind and solar now outcompete hydrocarbons on cost, with China adding 350 gigawatts of renewable capacity in 2024 alone—six years ahead of its 2030 target.
The Senate bill, dubbed the "Big Beautiful Bill," proposes eliminating incentives for electric vehicles and home energy improvements while sparing some support for energy storage and geothermal projects. Renewable energy proponents are pinning hopes on a handful of Republican senators to salvage parts of the Inflation Reduction Act’s incentive system. However, internal documents from lobbying groups like the American Exploration & Production Council (AXPC) reveal a concerted effort to shape policy in favor of fossil fuels, including delaying methane taxes and fast-tracking project approvals.
Beyond legislative battles, the Trump administration has taken administrative actions to prop up fossil fuels, such as declaring a dubious "energy emergency" to keep a Michigan coal plant operational. Analysts argue these moves prioritize political agendas over grid reliability or economic efficiency. With climate disasters like the Los Angeles wildfires underscoring the costs of inaction, the debate over subsidies highlights a stark divide between entrenched fossil fuel interests and the accelerating global shift toward clean energy.