Fossil Fuel Subsidies: Should they Stay or Should they Go?

Fossil Fuel Subsidies: Should they Stay or Should they Go?

May 1, 2017

Fossil fuel tax breaks cost the U.S. $4 billion per year. A former Treasury Department Environment and Energy official looks at whether that’s money well spent.

The U.S. fossil fuel industry benefits from $4 billion a year in government subsidies, most in the form of tax breaks. But over the past decade debate over the need for subsidies has intensified.

The energy industry argues that these subsidies promote the development of domestic energy and support oil and gas jobs. Opponents say there is little justification for subsidizing fossil fuels when government’s focus should be on clean energy and climate. And politicians from both sides of the aisle argue that the government could better use the money spent on subsidies elsewhere.

Guest Gilbert Metcalf, Professor of Economics at Tufts University and a Research Associate at the National Bureau of Economic Research, takes a look at the real impact of subsidies on the economics of energy development, renewables and on the environment.

Metcalf, who formerly served as the Deputy Assistant Secretary for Environment and Energy at the U.S. Department of Treasury, is a visiting scholar at the Kleinman Center for Energy Policy at the University of Pennsylvania.

Read his policy digest on Ending Fossil Fuel Tax Subsidies.

Other recent Kleinman Center publications on energy economics are available through these links: