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Pramila Jayapal, Ro Khanna Urge Axing Fossil Fuel Subsidies From Reconciliation

The lawmakers point out that nearly all value gained from subsidies goes straight to fossil fuel companies’ profits.

Rep. Pramila Jayapal listens as FBI Director Christopher Wray testifies during a House Judiciary Committee oversight hearing on Capitol Hill on June 10, 2021, in Washington, D.C.

On Wednesday, Congressional Progressive Caucus leaders sent a letter urging top Democrats to repeal fossil fuel subsidies that are currently included in Democrats’ Build Back Better Plan, saying that the tax breaks only serve to pad the pockets of fossil fuel industry elites.

The letter was spearheaded by Congressional Progressive Caucus Chair Rep. Pramila Jayapal (D-Washington) and Deputy Whip Rep. Ro Khanna (D-California), who say that House leaders should axe tax breaks like one that allows oil and gas companies to write off drilling costs, and another that allows them to use “Last In, First Out” accounting methods to reduce the taxable value of their assets.

Climate advocates and energy experts say such subsidies play a large role in keeping the fossil fuel industry afloat. According to a new report by Friends of the Earth, Oxfam America and BailoutWatch, the Democrats’ tax plan leaves $35 billion in subsidies for the fossil fuel industry. “We were dismayed to see that the current version of the Build Back Better Act in the House is missing most of the domestic fossil fuel subsidies repeal passed by the Senate Finance Committee earlier this year,” the progressives wrote in their letter. “There is no reason that the fossil fuel industry deserves special privileges over other businesses.”

The Congressional Progressive Caucus leadership went on to point out that fossil fuel “giveaways” don’t go toward helping energy production or stability, but toward padding the fossil fuel companies’ profits. Indeed, they cite a study from earlier this year that found that in 2019, 96 percent of the value over minimum rate of return created by 16 fossil fuel subsidies went directly to excess profits.

At the end of August, just as Congress was beginning to draft the Build Back Better Act, over 50 House representatives sent a letter urging Democratic leaders to include the repeal of fossil fuel subsidies in the bill.

“We should not fall for the industry myth that these subsidies are necessary for good job creation,” the lawmakers wrote. “Despite the fact that big fossil fuel companies claimed $8.2 billion in 2020 from the CARES Act pandemic relief bill, the industry still laid off 16 percent of its workforce.”

On the campaign trail, President Joe Biden pledged to end fossil fuel subsidies and pressure other world powers to do the same. “I don’t think the federal government should give handouts to Big Oil,” he said earlier this year when signing an executive order directing agencies to repeal the subsidies.

In the president’s original tax plan, which the Build Back Better Act is based on, Biden proposed eliminating a small raft of subsidies, but climate advocates slammed the plan for being insufficient. He has thus far remained mum about the Democrats’ current tax plan and the subsidies contained in it.

Climate advocates say that fossil fuel subsidies must end in order to fend off the ever worsening climate crisis. Funding the fossil fuel industry only increases the nation’s dependence on fossil fuels, keeping the industry artificially dominant as the industry is generally on the decline otherwise, the report finds.

Many climate advocates say that in fact, it is the fossil fuel industry that should be paying the government and the public for destruction wrought by climate disasters. The continued use of fossil fuels will have far more expensive consequences than any action taken to mitigate the climate crisis now, advocates and progressives say.

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