A new review of federal tax expenditures shows renewable energy absorbed nearly all U.S. energy-sector subsidies in fiscal year 2025, far surpassing support for fossil fuels.
By yourNEWS Media Newsroom
A new analysis finds that renewable energy received the overwhelming majority of federal energy-sector subsidies in fiscal year 2025, with explicit government support totaling $64.1 billion and nearly all of it flowing to renewables, electric vehicles, and energy-efficient technologies.
According to a new issue brief from the National Center for Energy Analytics, 90 percent of all federal energy-sector subsidies in fiscal year 2025 went to renewable energy. The analysis, reported by Just the News, also concludes that subsidies benefiting oil, gas, and coal primarily take the form of long-standing tax expenditures rather than direct financial support.
2025 12 NCEA FF Subsidies IssueBrief Tice 1 by yourNEWS Media
Using data from the U.S. Department of the Treasury, Paul Tice, a senior fellow at the National Center for Energy Analytics, calculated that total explicit federal subsidies for the entire energy sector reached $64.1 billion in fiscal year 2025—more than for any other domestic industry. The center was created by the Texas Public Policy Foundation as a national energy policy think tank.
Tice found that fossil fuel-related tax expenditures amounted to $2.6 billion in lost federal revenue during the fiscal year. By comparison, subsidies supporting renewable energy, electric vehicles, and energy-efficient equipment totaled $57.9 billion—an amount that exceeds the combined federal support for fossil fuels over the entire period from 1994 through 2025.
The report directly challenges claims that fossil fuel companies receive trillions of dollars in annual subsidies. The International Monetary Fund has estimated global energy subsidies at $7 trillion annually, while a September report from climate advocacy group Oil Change International estimated that oil, gas, and coal industries in the United States receive approximately $34.8 billion per year.
“That yearly figure continues a decades-long escalation of public support for the fossil fuel industry, despite the trillions in profits accumulated by the oil and gas industry and a laundry list of harms caused by fossil fuels,” the Oil Change International report stated.
The advocacy group argued that subsidies benefiting fossil fuel producers should instead be redirected toward social services and renewable energy development. “We’re paying $35 billion per year to prop up a polluting, expensive energy system instead of investing our public money into clean, affordable renewable energy,” Collin Rees, Oil Change International’s U.S. campaign manager, said in a statement.
Tice disputed those claims, arguing that activist-driven subsidy estimates rely on what he described as “flawed methodology.” He said such analyses often attempt to link the growth in fossil fuel consumption to government subsidies while relying heavily on interpolation and so-called “implicit” subsidies.
Implicit subsidies are based on the economic concept of externalities, which refer to indirect health or environmental costs attributed to fossil fuel use. Activists argue that because companies do not directly pay these costs, they constitute a form of subsidy. Tice countered that these calculations are highly subjective and so expansive that they distort the discussion.
“This is a theoretical exercise that serves only to cloud the issue and confuse the public,” Tice wrote.
The report explains that federal support for fossil fuels primarily comes through standard tax provisions such as expense deductions, research and development support, loan guarantees, and limited direct spending. Citing data from the U.S. Energy Information Administration, Tice noted that 84 percent of federal financial support for fossil fuels in fiscal year 2022 came from tax deductions tied to ordinary business expenses such as drilling surveys, labor, and infrastructure—costs that are deductible across many industries.
Additional tax provisions include capital expenditure treatments also available to sectors such as mining, timber, and agriculture, as well as smaller credits for activities like enhanced oil recovery, which injects carbon dioxide underground to extract additional oil while storing some emissions.
Many of these tax provisions date back more than a century, and because they are expense-based, Tice argued their impact on federal revenue is limited and often reversible due to market volatility. In some years, the industry generates negative tax expenditures.
Renewable energy companies, by contrast, benefit from production and investment tax credits for wind and solar generation, ethanol and other renewable fuels, electric vehicles, and energy-efficient equipment. Unlike expense deductions, these credits directly reduce overall tax liability, resulting in a far greater impact on federal revenues, the report states.
The analysis also found that U.S. support for fossil fuels is lower than that provided by many European countries, which rely more heavily on direct subsidies. Globally, energy subsidies have increased sharply in recent years, largely driven by price spikes following Russia’s invasion of Ukraine.
Tice concluded that eliminating all fossil fuel subsidies would have little effect on industry profitability or consumer demand. Instead, he said, renewable energy tax credits remain the dominant driver of federal energy subsidies.
“Income tax expenditures for renewable energy producers and clean energy users will continue to dwarf those for the traditional energy sector for the foreseeable future,” Tice wrote.
While provisions of the One Big Beautiful Bill Act, signed into law by President Donald Trump in July, are intended to phase out some renewable energy tax credits, the report notes that such credits have been extended repeatedly. First enacted in 1992 to support a fledgling industry, the credits have been renewed 11 times, raising questions about whether the phaseout will ultimately occur.
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