The Trump administration has already added nearly $40 billion in new federal subsidies for oil, gas, and coal in 2025, a report released Tuesday finds, sending an additional $4 billion out the door each year for fossil fuels over the next decade. That new amount, created with the passage of the One Big Beautiful Bill Act this summer, adds to $30.8 billion a year in preexisting subsidies for the fossil fuel industry. The report finds that the amount of public money the U.S. will now spend on domestic fossil fuels stands at at least $34.8 billion a year.
The increase amounts to “the largest single-year increase in subsidies we’ve seen in many years — at least since 2017,” says Collin Rees, the U.S. program manager for Oil Change International, an anti-fossil fuels advocacy organization and author of the report.
The U.S. has been subsidizing fossil fuel production for more than a century. Many of the tax subsidies logged in the report — including a tax break passed in 1913 that allows companies to write off large amounts of expenses related to drilling new oil wells — have been on the books for decades.
Fossil fuel subsidies have proven notoriously difficult to undo, even with a determined administration. After campaigning on ending tax breaks for Big Oil, President Joe Biden’s 2021 budget pledged to raise $35 billion over 19 years by eliminating certain fossil fuel subsidies; one of his first executive orders tasked agencies with getting rid of those subsidies. (“I don’t think the federal government should give handouts to Big Oil,” he said at a press conference announcing the order.)
But the phaseouts of these subsidies were nixed during climate legislation negotiations with then-senator Joe Manchin of West Virginia, who was the key swing vote in the Senate at the time and a recipient of fossil fuel money with lengthy ties to the coal industry. Meanwhile, the Inflation Reduction Act — the resulting compromise between Manchin and Democratic leadership, which was passed in August of 2022 — gave additional boosts to the fossil fuel industry in the form of subsidies for oil-and-gas-friendly technologies, like carbon capture and storage and certain types of hydrogen made with natural gas.
“What happens is you have these policies in place, and then you have a constituency that strongly advocates and lobbies for them, it becomes harder and harder to unwind them, which I think is the situation that we’re in today,” says Matthew Kotchen, a professor of economics at Yale University, who was not involved in the new analysis.
That cycle is continuing in the new administration. Fossil fuel companies spent millions of dollars getting Trump elected last year; one report from the advocacy group Climate Power puts the total number at $445 million. Those companies are seeing benefits as the administration pursues an aggressive deregulatory agenda, hobbles renewable energy projects, and downplays the importance of climate change. The Wall Street Journal reported Sunday that the president has taken to calling oil CEOs following their appearances on TV.
“It’s no secret that Trump and the Republicans are on the side of the fossil fuel industry and very much vice versa,” says Rees. “The fossil fuel industry spent hundreds of millions of dollars getting Republicans and Trump elected. They then presented their wish lists. Nearly everything on those wish lists was fulfilled, and in fact, they got a bunch of additional goodies that weren’t even in those wish lists.”
The new research builds on past work from Oil Change International, which last did the math on national fossil fuel subsidies in 2017, finding then that $20 billion was going out the door to the industry each year. To compile the new report, Rees and his colleagues combed through a variety of federal governmental sources on the amount of money going to the oil, gas, and coal industries each year.
The question of what, exactly, constitutes a federal subsidy is the topic of some debate. Environmental groups tend to have a broader scope in tallying up public money spent on fossil fuels, including federal money not distributed directly to oil companies. Conservative groups, meanwhile, take a much narrower approach. (For its report, Oil Change International used the definitions of subsidies set by the World Trade Organization in calculating domestic funding to fossil fuels.)
Due to a lack of transparency across the federal government, the calculations in this report are “likely to be an undercount,” Rees says. “There’s probably some things that we missed — some corners of the budget that are funding fossil fuels in different ways.”
The $4 billion in new yearly subsidies comes largely in the form of allocations contained in the One Big Beautiful Bill Act passed this summer. One of the biggest new subsidies — an expansion of the tax credit for carbon capture and storage — is, ironically, related to provisions from the Inflation Reduction Act, which President Trump campaigned on reversing. (The One Big Beautiful Bill Act did, however, crack down harshly on tax credits for wind and solar, carrying out part of Trump’s campaign promise.)
Carbon capture and storage is the process of capturing CO2 emissions and injecting them deep underground. The oil and gas industry has for decades injected CO2 underground to help recover difficult reserves that don’t respond well to traditional drilling methods. Environmentalists have long argued that the logic of replicating an oil and gas technique as a climate solution is seriously flawed — especially considering that a company could reap a climate tax credit from injecting CO2 that will then be used to create more fossil fuels.
In the original Inflation Reduction Act, which significantly expanded the existing carbon capture tax credit, there was a price differential baked into the tax credits: Producers got more money per ton of CO2 they sequestered underground without any oil production involved, and less for CO2 used specifically to produce more oil and gas. But the One Big Beautiful Bill Act eliminated this differential, allowing producers to collect on the full credit even if they are using CO2 to produce more fossil fuels. The total expansion of tax credits for carbon capture in the One Big Beautiful Bill Act, the analysis found, could send out more than $1.4 billion of public money to oil and gas companies each year.
The types of federal subsidies addressed in this report are just one kind of boost the government gives dirty industries. The analysis does not address state and local tax breaks for fossil fuel companies, nor does it add up international financing from publicly funded U.S. entities to overseas fossil fuel companies and projects. (Just before he left office, President Biden backed a limit on funding for dirty investments made by the U.S. Export-Import Bank, a part of the executive branch that facilitates the export of U.S. goods and services. President Trump promptly encouraged the Bank in April to resume funding for coal projects abroad.)
The fossil fuel industry also benefits financially from not having to address the negative side effects of their products: Coal companies don’t have to deal with the health impacts from people breathing polluted air, for example, while oil and gas companies don’t need to think about damages from extreme weather juiced up by climate change caused by their product. Kotchen, the Yale economist, calculated in a 2021 paper published in the Proceedings of the National Academy of Sciences that a small handful of U.S. oil, gas, coal, and diesel giants, by not having to pay for the damage they cause, get $62 billion in what he calls “implicit subsidies” per year.
I asked him if, given the major environmental rollbacks overseen by the Trump administration, he’d expect that figure to increase if he redid his analysis in 2025. “The environmental externalities are higher, and production has gone up,” he says. “I think [the number] would be a lot higher.”
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Molly Taft, WIRED grist.org
