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President-elect Donald Trump It has repeatedly promised to overturn the federal government, and has recruited firebrands Elon Musk and Vivek Ramaswamy to help it do so. The two will lead the Department of Government Efficiency and aim to cut $2 trillion from the U.S. budget.
That’s about a third of total federal spending, and the pair believe it could also cut the government workforce by as much as 75%. Announcing the office known as DOGE, Trump said “these great Americans” will “dismantle” bureaucracy, “cut” regulations, cut “wasteful” spending and “restructure” agencies. said. “We will not go gently,” Ramaswamy promised X.
Overall, this is likely to be bad news for U.S. environmental policy and the Biden administration’s landmark climate legislation, the Inflation Reduction Act. But if DOGE wields its cleaver broadly enough, the department has the potential to actually please environmentalists by eliminating several things they have long loathed, including fossil fuel subsidies.
“This is a truth test for their whole message,” said Matthew Tejada, a former Environmental Protection Agency official who is now senior vice president at the Natural Resources Defense Council. “The handout to the oil and gas industry, which allows multinational corporations to make billions of dollars a year, flies in the face of everything else they say.”
The extent of these federal subsidies varies depending on how they are calculated. The Fossil Fuel Subsidy Tracker estimates this at nearly $18 billion in 2023. The International Monetary Fund estimates it at $757 billion, including “implicit” subsidies such as underestimating environmental damage. Although the exact numbers are debated, it is clear that ending these industry benefits could result in billions of dollars in revenue.
“The biggest subsidy is allowing these companies to cover our health for free.”
“The massive support we continue to provide to an industry that already extracts tens of billions of dollars from our country will no doubt be somewhere in their sights,” Tejada said. “There are dozens of different grants available.”
One key tax break allows companies to deduct most of the cost of drilling new oil and gas wells. The Joint Committee on Taxation, a bipartisan panel of Congress, estimates that repealing this “intangible drilling cost” provision could generate an additional $6 billion in revenue by 2032. Oil, gas and coal reserves have been recorded since 1926. Removing it would generate an additional $7.3 billion.
“I don’t know how much they can cut from the tax code subsidies,” said Marc Jacobson, a professor of civil and environmental engineering at Stanford University. He said oil and gas companies would probably lobby successfully to protect their interests. And he argued that the biggest benefit they receive from government is the ability to pollute, which is outside the scope of DOGE’s authority.
“They don’t talk about hidden subsidies,” Jacobson said. “The biggest subsidy is allowing these companies to cover our health for free.”
Neither the Trump transition team nor the American Petroleum Institute responded to multiple requests for comment.
Both Tejada and Jacobson said their wish list for DOGE would go beyond fossil fuel subsidies. One of the deadlines Tejada is watching arrives this spring, when the first Trump administration tax cuts expire. Ignoring this could be one way the government can work towards a balanced budget. Jacobson said another topic that is often overlooked is Washington’s support for corn ethanol fuel. The government has spent billions of dollars supporting a fuel that studies show has a greater climate and environmental impact than gasoline and now accounts for 45% of all corn grown in the United States.
But for now, they say, these hopes remain for DOGE to address environmental issues. “They’re probably going to end up cutting a lot less than they want to cut,” Jacobson said.
