Exclusive: Khanna Proposes End to 'Unconscionable' Taxpayer Subsidies for Big Oil

As fossil fuel giants continue to rake in billions of dollars in profits, U.S. Rep. Ro Khanna on Thursday is reintroducing legislation to end giving billions in taxpayer dollars to companies that inject captured carbon dioxide into wells to extract more climate-wrecking oil.

"The fossil fuel industry receives over $20.5 billion in taxpayer dollars every year while fleecing American consumers and driving a global climate crisis," Khanna (D-Calif.) told Common Dreams. "The End Polluter Welfare for Enhanced Oil Recovery Act will eliminate the subsidy for captured carbon used for enhanced oil recovery, which only leads to more fossil fuel extraction and does nothing to mitigate climate change."

While advocates of carbon capture utilization and storage claim that it's necessary to address the fossil fuel-driven climate emergency, most CO2 captured in the United States is used to extract more planet-heating oil and gas, leading many scientists and green groups to argue that it is a "false climate solution."

"Oil drilling is the real story behind the fossil fuel industry's carbon capture obsession," said Jim Walsh, policy director at Food & Water Watch, which has endorsed Khanna's bill. "These corporate polluters are raiding public coffers from what could easily be hundreds of billions of dollars while greenwashing the further degradation of our climate."

Walsh also highlighted the impact on people who live near fossil fuel infrastructure, telling Common Dreams that "communities across the country are facing the potential for thousands of harmful industrial projects and tens of thousands of miles of dangerous pipelines that will do little more than put money in the pocket of the fossil fuel industry."

Despite such warnings, Congress has actually boosted Section 45Q tax giveaways for companies using captured CO2 for enhanced oil recovery (EOR) since Khanna first introduced the legislation in December 2021. The Inflation Reduction Act of 2022 was heralded as a "landmark" climate package for its investments in cleaner energy, but a little-noticed provision in the law increased the relevant credit for CO2 injection from $35 to $60 per metric ton.

"Taxpayers shouldn't be left footing the bill to help Big Oil boost its profits at the expense of our health and economy."

This year, 15 other House members are backing Khanna's bill, as are over a dozen organizations. Among them is Evergreen Action, which has spent years calling for reforms, including a June memo denouncing 45Q subsidies that encourage more fossil fuel production.

"It's unconscionable that American taxpayers are still subsidizing oil and gas companies to extract even more fossil fuels through so-called 'enhanced oil recovery,'" said Evergreen Action senior energy transition policy lead Mattea Mrkusic. "By eliminating these wasteful tax giveaways, Rep. Ro Khanna's bill takes a crucial step toward ending one of many federal fossil fuel handouts that drive climate pollution."

"Climate change is no longer a distant threat—it's happening right now, fueling more frequent and severe weather events, disproportionately impacting marginalized communities, and costing the American people billions every year," Mrkusic told Common Dreams. "Taxpayers shouldn't be left footing the bill to help Big Oil boost its profits at the expense of our health and economy. It's a perfect time to fully invest in our clean energy future instead."

Khanna's reintroduction of the End Polluter Welfare for EOR Act follows the hottest year in human history—a record that 2024 is expected to beat, with historic summer heat that led global scientists to demand urgent action to shift away from fossil fuels.

It also comes less than six weeks away from the U.S. general election, in which Americans are set to determine the makeup of Congress and the next occupant of the Oval Office. While Democratic Vice President Kamala Harris has the support of nearly every major climate group, former Republican President Donald Trump, who has pledged to swiftly gut federal climate policies if Big Oil puts $1 billion toward his campaign, has been dubbed an existential threat to progress on the climate crisis.

Regardless of who wins in November, there's also a looming Capitol Hill battle over taxation, given that policies Trump signed into law in 2017 are set to expire at the end of next year. As Common Dreamsreported in June, the climate movement sees that debate as an opportunity to end tax giveaways for the fossil fuel industry.

"Fossil fuel companies have raked in astronomical profits at the expense of communities while Big Oil and Gas lobbyists actively work to keep us hooked on their polluting products that perpetuate the climate crisis," said Mahyar Sorour, Sierra Club's director of beyond fossil fuels policy. "It is absurd that taxpayers should then also provide a blank check through subsidies, corporate giveaways, and sweetheart deals."

Sierra Club is supporting Khanna's bill, as are 350.org, Alliance for Affordable Energy, Center for Biological Diversity, Center for International Environmental Law, Climate Justice Alliance, Environment America, Friends of the Earth, Greenpeace USA, Oil Change International, Our Revolution, Oxfam America, Progressive Democrats of America, U.S. PIRG, and Zero Hour.

"We must end the billions of dollars in wasteful taxpayer subsidies to the fossil fuel industry," Sorour stressed. "Congress continues to say they are concerned about the country's deficit. Ending handouts to billion-dollar corporations that price gouge consumers and pollute our environment is a great way to reduce spending."

"We are grateful to Rep. Khanna for leading this legislation and look forward to supporting this and other types of similar legislation that hold Big Oil and Gas companies accountable," Sorour told Common Dreams.

Earlier this year, U.S. Sen. Bernie Sanders (I-Vt.) and Rep. Ilhan Omar (D-Minn.) reintroduced the broader End Polluter Welfare Act, of which Khanna is a co-lead. Its sponsors say that by closing tax loopholes and ending corporate handouts to the fossil fuel industry, that bill "would save American taxpayers up to $170 billion over the next 10 years."