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Report on United States Fossil Fuel Subsidies and Their Conflict with Sustainable Development Goals

A recent analysis by Oil Change International reveals that the United States government provides over $30 billion in annual subsidies to the fossil fuel industry. This financial support has more than doubled since 2017, presenting a significant challenge to the achievement of multiple Sustainable Development Goals (SDGs), particularly those related to climate, energy, and health.

Key Findings of the Analysis

The report highlights several critical points regarding the scale and impact of these government actions, which include tax breaks, direct payments, and price controls.

• Financial Scale: Fossil fuel companies in the U.S. receive approximately $31 billion in subsidies each year.
• Primary Beneficiaries: The bulk of these funds benefits major energy corporations, such as ExxonMobil, Chevron, BP, Shell, and TotalEnergies, which collectively reported over $100 billion in profits in 2024.
• Economic Incentive: According to Collin Rees of Oil Change International, these subsidies enable new fossil fuel production that would otherwise be economically unviable and serve to increase profits for shareholders and executives.

Implications for Sustainable Development Goals (SDGs)

The continuation and expansion of fossil fuel subsidies directly undermine the global commitment to the 2030 Agenda for Sustainable Development.

Conflict with SDG 7 (Affordable and Clean Energy) and SDG 12 (Responsible Consumption and Production)

These subsidies create a market distortion that hinders progress towards key SDG targets.

1. SDG Target 7.2: By artificially lowering the cost of fossil fuels, the subsidies impede efforts to substantially increase the share of renewable energy in the national energy mix.
2. SDG Target 12.c: The financial support is a direct contradiction of the call to rationalize inefficient fossil-fuel subsidies that encourage wasteful consumption.

Setbacks for SDG 13 (Climate Action)

The environmental consequences of subsidizing fossil fuels are a major barrier to climate action.

• The burning of subsidized coal, oil, and natural gas releases greenhouse gases, accelerating the rise in global temperatures.
• This contributes directly to an increase in extreme weather events and rising sea levels, counteracting the objectives of SDG 13 to combat climate change and its impacts.

Adverse Impacts on SDG 3 (Good Health and Well-being) and SDG 11 (Sustainable Cities)

The environmental degradation caused by the fossil fuel lifecycle has significant public health consequences.

• Air and Water Quality: The extraction process can lead to groundwater contamination, while combustion releases pollutants that contribute to smog, acid rain, and poor air quality, negatively impacting SDG Target 3.9 (reduce illnesses from pollution) and SDG Target 11.6 (reduce the environmental impact of cities).

Policy Considerations and Strategic Recommendations

Addressing the issue requires a fundamental shift in national policy to align with sustainability commitments.

Proposed Policy Reforms

To mitigate the negative impacts and align with the SDGs, the following strategies are recommended:

• End Fossil Fuel Subsidies: The primary recommendation is the complete cessation of financial support for the fossil fuel industry.
• Implement Carbon Pricing: Introducing mechanisms such as a carbon tax can help internalize the environmental costs of fossil fuels.
• Promote Clean Energy Transition: Redirecting funds towards renewable energy sources, energy efficiency improvements, and the adoption of electric vehicles would support SDG 7 and SDG 13.

As noted in the analysis, subsidies are political choices. A realignment of these choices is essential for the United States to meet its commitments to the Sustainable Development Goals and foster a sustainable future.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

SDG 7: Affordable and Clean Energy

• The article discusses the U.S. government’s financial support for the fossil fuel industry (coal, oil, and natural gas), which is in direct opposition to the goal of promoting clean energy. It contrasts this with the need for a “large-scale transition to renewable energy sources such as solar and wind,” which is a core component of SDG 7.

SDG 12: Responsible Consumption and Production

• This goal is directly addressed through the article’s central theme: fossil fuel subsidies. The article defines these subsidies as “government actions that financially support the production or consumption of coal, oil, and natural gas.” This directly relates to the aim of achieving sustainable management and efficient use of natural resources.

SDG 13: Climate Action

• The article explicitly links the burning of fossil fuels, supported by subsidies, to climate change. It states that this practice “releases carbon dioxide and other gases that can trap heat in our atmosphere, leading to a sharp increase in global temperatures,” which can result in “extreme weather events and rising sea levels.” This directly connects the issue to the urgent need for climate action.

SDG 3: Good Health and Well-being

• The article highlights the negative health impacts of fossil fuels. It mentions that the “extraction process can also contaminate groundwater, while air pollutants can contribute to the formation of acid rain, smog, and poor air quality.” These environmental health risks are a key concern of SDG 3.

2. What specific targets under those SDGs can be identified based on the article’s content?

Target 12.c: Rationalize inefficient fossil-fuel subsidies

• This is the most prominent target discussed. The entire article focuses on the “$31 billion in U.S. subsidies each year” for fossil fuels. It defines these subsidies (tax breaks, direct payments) and discusses the need to reform government policies by “ending fossil fuel subsidies.” This aligns perfectly with the target’s goal to “rationalize inefficient fossil-fuel subsidies that encourage wasteful consumption.”

Target 13.2: Integrate climate change measures into national policies

• The article points out a lack of integration of climate measures in U.S. policy by highlighting the continuation and increase of fossil fuel subsidies despite “increased awareness of the detrimental impacts of carbon emissions.” It discusses potential policy changes like implementing “carbon taxes” and notes that subsidies are “political choices about what we’re choosing to support as a country,” emphasizing the need to align national policy with climate goals.

Target 7.a: Promote investment in clean energy

• While the article focuses on the negative aspect (subsidizing fossil fuels), it implicitly addresses this target by presenting the alternative: a “large-scale transition to renewable energy sources such as solar and wind.” The $31 billion funneled to fossil fuels represents a massive investment that is not going toward clean energy technology and infrastructure, thereby hindering progress on this target.

Target 3.9: Reduce illnesses and deaths from pollution

• The article’s mention of fossil fuel activities leading to contaminated groundwater, smog, and poor air quality directly relates to this target. These forms of pollution are known to cause significant health problems, and reducing reliance on fossil fuels, as suggested in the article, would contribute to achieving this target.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Indicator 12.c.1: Amount of fossil-fuel subsidies

• The article provides a direct, quantifiable measure for this indicator. It states that “fossil fuel firms receive around $31 billion in U.S. subsidies each year.” It also provides a historical data point for comparison, noting this amount is “more than double what firms received in 2017,” allowing for the tracking of progress (or lack thereof) over time.

Implied Indicator for SDG 13: Greenhouse Gas Emissions

• The article does not provide specific numbers but clearly implies the relevance of measuring greenhouse gas emissions. It states that burning fossil fuels “releases carbon dioxide and other gases that can trap heat in our atmosphere.” A reduction in these emissions would be a key indicator of progress in climate action.

Implied Indicator for SDG 7: Share of Renewable Energy

• The article’s call for a “large-scale transition to renewable energy sources such as solar and wind” implies that the share of these sources in the total energy mix is a critical indicator. The continued subsidization of fossil fuels is presented as a barrier to increasing this share.

Implied Indicator for SDG 3: Air Quality Levels

• By mentioning that air pollutants from fossil fuels contribute to “smog, and poor air quality,” the article implies that measurements of air quality (e.g., levels of particulate matter) are relevant indicators. Improving these levels would signify progress towards reducing the health impacts of pollution.

4. Table of SDGs, Targets, and Indicators

Source: thecooldown.com