Greenpeace USA responded critically on Wednesday after the U.S. Department of the Treasury released a new report offering more details about President Joe Biden’s Made in America tax plan—part of the $2 trillion jobs and infrastructure proposal that the president unveiled last week.
“Biden’s proposal to eliminate just $35 billion in tax credits and loopholes over a 10-year period is simply not good enough.”
—John Noël, Greenpeace USA
Specifically, the environmental advocacy group took aim at the Biden administration’s approach to subsidies for the fossil fuel industry, arguing that it falls short. As senior climate campaigner John Noël put it: “Not a dime of our tax dollars should go towards corporations that poison our communities and wreck our climate.”
Biden faces global pressure to end all subsidies for polluters. The Treasury report (pdf) notably came on the heels of Yale University economist Matthew Kotchen publishing a paper in Proceedings of the National Academy of Sciences revealing that U.S. fossil fuel companies are getting about $62 billion in implicit subsidies annually.
“Today the tax code contributes to climate change by providing significant tax preferences and subsidies for the oil and gas industry,” the Treasury report says. “The president’s tax plan would remove subsidies for fossil fuel companies, while providing incentives to reposition the United States as a global leader in clean energy and to ensure that our infrastructure is resilient to storms, floods, fires, and rising sea levels. Targeted investments in a clean and resilient energy future would also boost jobs for American workers and address environmental injustices.”
The report continues:
Estimates from the Treasury Department’s Office of Tax Analysis suggest that eliminating the subsidies for fossil fuel companies would increase government tax receipts by over $35 billion in the coming decade. The main impact would be on oil and gas company profits. Research suggests little impact on gasoline or energy prices for U.S. consumers and little impact on our energy security.
The Made in America tax plan would advance clean electricity production by providing a 10-year extension of the production tax credit and investment tax credit for clean energy generation and storage, and making those credits direct pay. Together with non-tax initiatives, like the Energy Efficiency and Clean Electricity Standard, the plan sets the country on a path to 100% carbon pollution-free electricity by 2035. In addition to addressing climate change, analysis by an independent think tank suggests that plans like the president’s would also lead to a dramatic reduction in local air pollution, reducing premature deaths from breathing polluted air by at least two-thirds. Low-income and minority households are more likely to live in communities with poor air quality, so these benefits would help address equity concerns as well.
The plan, as the report explains, would further create and expand tax incentives for clean energy infrastructure as well as carbon capture and sequestration projects. It would also “penalize polluters through tax disincentives,” restoring a tax that goes toward the Environmental Protection Agency’s efforts to clean up Superfund sites.
On the subsidies front, Noël urged decision-makers to support a bolder proposal.
“Biden’s proposal to eliminate just $35 billion in tax credits and loopholes over a 10-year period is simply not good enough,” he said. “Fossil fuel corporations receive $15 billion in direct subsidies from the federal government every year.”
“We urge Congress to pass the End Polluter Welfare Act, which would save taxpayers $150 billion over the next decade and allow us to invest in the clean energy economy of the future,” he continued, referencing legislation sponsored by Rep. Ilhan Omar (D-Minn.) and Sen. Bernie Sanders (I-Vt.).
Noël added that “the End Polluter Welfare Act is the most comprehensive legislation to address fossil fuel subsidies and close existing tax loopholes. It will be reintroduced in Congress later this month.”
The goal of the tax plan is to make American companies and workers more competitive by eliminating incentives to offshore investment, substantially reducing profit shifting, countering tax competition on corporate rates, and providing tax preferences for clean energy production.
— Treasury Department (@USTreasury) April 7, 2021
Sanders—a former Democratic presidential primary candidate who ultimately backed Biden—and Omar first introduced the bill in July 2020, long before Biden took office, and a few months into a public health crisis that has persisted.
“At a time when we are dealing with the coronavirus pandemic and an economic decline,” Sanders said last summer, “it is absurd to provide billions of taxpayer subsidies that pad fossil fuel companies’ already-enormous profits.”
While Greenpeace is calling on Congress and the current administration to go further to end subsidies for the dirty energy sector, Reuters noted Wednesday that the tax plan “is expected to face resistance from fossil fuel lobbyists.”
Frank Macchiarola, senior vice president for policy, economic, and regulatory affairs at the trade association American Petroleum Institute (API) put out a statement last week welcoming some of the administration’s American Jobs Plan—the broader infrastructure proposal—but opposing other elements of it.
“Targeting specific industries with new taxes would only undermine the nation’s economic recovery and jeopardize good-paying jobs, including union jobs,” he said. “It’s important to note that our industry receives no special tax treatment, and we will continue to advocate for a tax code that supports a level playing field for all economic sectors along with policies that sustain and grow the billions of dollars in government revenue that we help generate.”
Climate campaigners and reporters have pushed back against Macchiarola’s comments.
“Those costs are absorbed by society. So instead of paying for the real cost of gasoline at the pump, we pay for it with the deterioration of our health, climate, and environment, and the costs associated with that collective deterioration.” https://t.co/3FkLayLB2A
— Kristin Toussaint (@kristindakota) April 6, 2021
As journalist Emily Atkin noted Tuesday in her newsletter HEATED, Kotchen of Yale said his paper “helps clarify what the domestic fossil fuel industry has at stake financially when it comes to policies that seek to address climate change, adverse health effects from local pollution, and inefficient transportation.”
“That’s true,” Atkin wrote. “But it also helps clarify what we have at stake financially when it comes to those same policies. Because even though we’re giving fossil fuel producers a $62 billion annual benefit from implicit subsidies, that’s not even close to how much they cost. According to Kotchen’s study, implicit subsidies cost society an average of $568 billion per year. That means they cost 89% more to provide than they do to accept.”