In a recent executive order, President Joe Biden has directed federal agencies to eliminate fossil fuel subsidies. The agencies are to find new opportunities that will “spur innovation, commercialization, and deployment of clean energy technology.”

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While the news has caused jitters among big oil corporations, conservation groups welcome the move toward clean energy. Cutting fossil fuel subsidies is a crucial step in reaching clean energy goals. After all, continuing such subsidies in a country that aims to go green means that the U.S. is essentially paying fossil fuel companies to pollute the air.

According to the Environmental and Energy Study Institute, there are several direct and indirect tax subsidies to the fossil fuel industry. In the U.S., direct subsidies to the oil industry reach a total of over $20 billion per year. Many of these subsidies intend to help American fossil fuel producers compete with producers in parts of the world where fuel production is cheaper.

Among the direct subsidies is the Intangible Drilling Cost Deduction, which deducts costs incurred for drilling in the United States. The Percentage Depletion subsidy reduces taxable amounts, while the Credit for Clean Coal Investment offers tax credits for energy investments. Besides these direct subsidies, the U.S. also offers indirect subsidies for tax relief and foreign tax credits.

According to a Reuters report, some fossil fuel industry leaders are not taking the new directives well. Before the ink dried on the order, the Western Energy Alliance filed a lawsuit challenging it. Specifically, Western Energy Alliance wants the order to reverse fossil fuel leasing on federal land declared unlawful by the courts. 

This lawsuit represents some of the opposition against the country’s move toward clean energy. Some industry leaders have already lamented that the decision will make the U.S. reliant on foreign energy, alleging that this may put the country in a tricky economic position.

“With a stroke of a pen, the administration is shifting America’s bright energy future into reverse and setting us on a path toward greater reliance on foreign energy produced with lower environmental standards,” Mike Sommers, president of the American Petroleum Institute, said in a statement.

Despite complaints from the fossil fuel industry, environmental activists have outlined just how important this executive order is in addressing the climate crisis. As Angela Anderson, director of the Climate and Energy Program at the Union of Concerned Scientists, said in a statement, “Climate change is not a distant crisis but rather one that has already reached our doorstep and can no longer be ignored.” Anderson also explained that “Black, brown, Indigenous and low-income communities are among the most devastated by the climate crisis. The executive order takes steps to remedy this unfair burden by incorporating equity and justice throughout the climate agenda.”

Via CleanTechnica

Lead image via Center for American Progress