Biden plan to end U.S. fossil fuel subsidies faces big challenges

By Timothy Gardner

WASHINGTON (Reuters) – President-elect Joe Biden’s promise to end U.S. fossil fuel subsidies worth billions of dollars a year for drillers and miners could be hard to keep due to resistance from lawmakers in a narrowly divided Congress, including from within his own party.

The challenge reflects just one of the obstacles that Biden will need to overcome as he seeks to usher in sweeping measures to combat climate change and transform the nation’s economy to net-zero emissions within three decades. Biden has said axing fossil fuel subsidies will generate money to help pay for his broader $2 trillion climate plan.

While Biden can take executive action to reverse President Donald Trump’s rollbacks of rules meant to reduce greenhouse gas emissions, reforming tax breaks that allow companies to produce oil, gas and coal more cheaply will require Congress to pass legislation.

Doing so could be hard, even though Biden spent 36 years in the Senate where he is known as a dealmaker.

“It’s dead on arrival in the Senate,” said Gilbert Metcalf, a former deputy assistant secretary for environment and energy at the Treasury Department under former President Barack Obama, referring to any standalone legislation ditching the tax breaks if Republicans maintain control of the chamber.

Even if two of Biden’s fellow Democrats win runoff votes in Georgia on Jan. 5, bringing the Senate to a 50-50 split with Vice President-elect Kamala Harris acting as tie breaker, chances of passing a tax package are slim, experts said.

That is because moderate Democrats from fossil fuel producing states, like Senators Martin Heinrich of New Mexico and Joe Manchin of West Virginia, the top Democrat on the Senate Energy Committee, could stymie the effort.

“In states like New Mexico, where senators might be green enough to support a climate bill … a measure that merely strips tax provisions looks like a non-starter,” said Kevin Book, an analyst at ClearView Energy Partners.

Neither Manchin’s office, nor Heinrich’s responded to requests for comment.

Obama also wanted to ditch tax breaks for fossil fuels to send a signal to the world that the United States was serious about speeding a transition away from fossil fuels to tackle climate change.

But even with a commanding Democratic majority in the Senate in Obama’s first six years in office, he was unable to kill the subsidies.

The Biden transition team did not respond to a request for comment.

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