New York Must Stop Paying Polluters

By Rich Schrader | November 21, 2021

Momentum is growing among legislators and the public to eliminate government giveaways to the fossil fuel industry. Congressman John Kerry described fossil fuel subsidies as the “definition of insanity” at the recent COP 26 United Nations climate change conference. The U.N. Development Program calculated that the world spends $423 billion each year to subsidize oil, gas, and coal — which is about four times the amount needed to help impoverished countries address climate change. And this discussion about subsidies isn’t only taking place on a worldwide platform, but also right here in New York State.

Currently, New York provides $1.6 billion every year in tax breaks for the fossil fuel industry, encouraging and financially incentivizing the very highly-polluting industry that is driving the global climate crisis. This practice directly contradicts our state’s climate goals because in 2019 New York enacted the Climate Leadership and Community Protection Act, a nation-leading climate law that sets ambitious goals for our state, aiming for 100% zero-emission electricity by 2040 and an 85% reduction in greenhouse emissions by 2050. And it’s New York taxpayers, like you and me, who foot the bill for this annual multi-billion-dollar giveaway.

Thankfully, Senator Liz Krueger and Assemblyman Kevin Cahill will introduce a bill (S7438/A8483) this upcoming legislative session that tackles this problem. Krueger and Cahill’s Fossil Fuel Subsidies Elimination bill would repeal many of the handouts — tax credits, breaks, subsidies, and refunds — that currently prop up the fossil fuel industry in New York State. The bill would begin to address the $1.6 billion in fossil fuel tax breaks, starting with some of the most egregious fossil fuel-related tax expenditures which currently cost the state $330 million.

New York’s savings would include $118 million by repealing the tax exemption currently given to airline fuels; $89 million saved by ending the tax exemption for research and development within the fossil fuel industry; $57.7 million saved by removing the tax exemptions for liquid petroleum gases; $11.3 million saved by eliminating the tax exemption for “bunker” fuels used in container ships and commercial shipping vessels; $4.8 million saved by repealing the tax exemption for diesel and other fuels used in manufacturing; and $4 million saved by removing the tax exemption for oil and gas used to operate fracked gas infrastructure, like gas pipelines, distribution lines, and compressor stations.

Senator Krueger and Assemblyman Cahill have made sure to consider the needs of everyday New Yorkers in the bill, which also preserves some narrow tax advantages that serve the public interest. These include a home heating credit that primarily benefits low- to moderate-income households, and an agricultural exemption that helps small to midsize farmers in the state. This important divestment from fossil fuels is much needed, generating millions of dollars for the state that can be put to use for the public good, and ensuring that the goals of the Climate Leadership and Community Protection Act are attainable. Once and for all, the state must stop subsidizing the industry that is responsible for the climate crisis.

Rich Schrader is the New York Legislative and Policy Director for the Natural Resources Defense Council