Any strategy that favors fossil fuels economically or logistically over other energy sources is known as a fossil fuel subsidy. Different types of fossil fuels are oil, gas, and coal. Despite the reality that most voters seek to eliminate fossil fuel subsidies, the US government has subsidized coal, oil, and gas for decades. Experts say that direct contributions to the fossil fuel sector currently average about $20 billion a year, with the federal government contributing $15 billion. Indirect subsidies, which are not directly aimed at fossil fuel companies but also favor them, amount to $649 billion a year in the United States alone.
The fossil fuel sector receives various direct and indirect subsidies from the federal government. Direct subsidies are clauses in the US tax code intended to promote and reward domestic fossil fuel-related activity directly. Other tax provisions targeted at enterprises, in general, establish indirect subsidies that aren’t exclusive to the fossil fuels sector. In the case of indirect subsidies, determining the amount of these subsidies is more complicated. Another form of government assistance to the fossil fuel industry is the subsidized expense of selling federal lands for fossil fuel production, which is not covered in this fact sheet. The Low Income Home Energy Assistance Program (LIHEAP), which helps low-income families with heating expenses, is one example of fossil fuel subsidies that offer public assistance.
The planet has been moving toward clean energies in recent years. According to a recent survey by the International Renewable Energy Agency (IRENA), unsubsidized renewable energy is now most commonly the cheapest form of energy production. The study finds that the cost of renewable energy construction and maintenance, a significant roadblock to widespread implementation, is declining. These reduced prices are likely to accelerate the widespread deployment of renewables evermore, complementing ongoing initiatives by policymakers and companies. The study also discusses the role of renewables in sustainable development and the need for governments to assist in achieving the Paris Agreement’s climate targets, which comes only months before the United Nations Climate Action Summit in Abu Dhabi in September. Climate change’s harmful effects, such as more extreme heatwaves, increasing sea levels, and the melting of sea ice, are increasingly becoming more visible across the globe. According to the Intergovernmental Panel on Climate Change, these troubling effects will escalate at a temperature increase of 2°C above pre-industrial levels. As the data shows, ridding the planet of fossil fuels and reducing the impact of climate change depends on promoting clean energy adoption, a roadmap that would take a collective initiative from industries, states, and individuals. The United Nations aims to prioritize sustainable energies, which are included in its Sustainable Development Goals. For several years, financial institutions viewed renewables as dangerous due to their high cost, resulting in increased loan rates for individuals and companies seeking financing for renewable energy production. This trend has been on the decline since the early 2000s, according to the IRENA survey. The global weighted average cost of electricity from solar power concentration dropped by 26%, bioenergy by 14%, solar photovoltaics, geothermal, onshore and offshore wind, and hydropower by 12%.