Rajan Wilcox
Fossil fuels, including petroleum, natural gas, and coal, have dominated the United States' energy mix for over a century. In 2023, fossil fuels accounted for about 84% of the country's primary energy production. However, there is a growing recognition of the need to develop alternative energy sources, such as solar and wind power. While renewable energy sources have seen increased adoption in recent years, they still only account for a small portion of the country's energy mix. The United States also provides tax subsidies to the fossil fuel industry, which has led to scrutiny from the public and lawmakers due to their impact on the environment and public health.
| Characteristics | Values |
|---|---|
| Fossil fuels accounted for in total U.S. primary energy production in 2023 | 84% |
| Percentage of U.S. energy consumption from fossil fuels in 1966 | 94% |
| Percentage of U.S. energy consumption from fossil fuels in 2019 | 80% |
| U.S. energy consumption from fossil fuels in 2023 | 60% |
| U.S. energy consumption from nuclear energy in 2023 | 19% |
| U.S. energy consumption from renewable sources in 2023 | 21% |
| U.S. direct subsidies to the fossil fuel industry per year | $20 billion |
| Allocation of U.S. direct subsidies to coal | 20% |
| Allocation of U.S. direct subsidies to natural gas and crude oil | 80% |
| Global expenditure on fossil fuel subsidies in 2017 | $5.2 trillion |
| U.S. expenditure on fossil fuel subsidies in 2017 | $649 billion |
| Percentage of Americans who want to develop alternative energy sources | 77% |
| U.S. energy consumption from solar and wind power in 2018 | <4% |
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What You'll Learn
Fossil fuels dominate US energy production
Fossil fuels, including petroleum, natural gas, and coal, have dominated the US energy mix for over a century. In 2023, fossil fuels accounted for about 84% of total US primary energy production. While the mix has changed over time, with petroleum consumption decreasing since its peak in the 1970s, fossil fuels continue to play a significant role in US energy production and consumption.
In 2019, fossil fuels accounted for 80% of both domestic energy production and consumption in the US. This marked a decrease from its peak in 1966 when fossil fuels accounted for 93% of US energy production and 94% of energy consumption. The total amount of fossil fuels consumed in the US has also been declining, with coal consumption leading the way, followed by a decrease in petroleum consumption.
Despite the growth of renewable energy sources, such as solar and wind power, fossil fuels still dominate US energy production. In 2018, fossil fuels met about 80% of the nation's energy demand, a slight decrease from 84% a decade earlier. While renewable energy sources have become more competitive in terms of cost and performance, fossil fuels continue to receive substantial subsidies and support from the US government.
The US government provides tax subsidies and other mechanisms of support to the fossil fuel industry, totaling an estimated $20 billion per year. These subsidies have been in place for decades, initially implemented to lower production costs and encourage new domestic energy sources. However, with the increasing maturity and profitability of the domestic fossil fuel industry, these subsidies are facing scrutiny for their continued suitability, scale, and effectiveness.
In conclusion, while renewable energy sources are gaining traction, fossil fuels continue to dominate US energy production. The US has relied on fossil fuels for over a century, and the industry remains supported by government subsidies. However, with the growing awareness of the environmental and health impacts of fossil fuels, there is a push for alternative energy sources and a phase-out of fossil fuel subsidies.
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Tax subsidies for fossil fuels
The United States has a long history of subsidising fossil fuels. Fossil fuels—petroleum, natural gas, and coal—accounted for about 84% of total US primary energy production in 2023. In 2018, fossil fuels fed about 80% of the nation's energy demand, down from 84% a decade earlier.
Numerous energy subsidies exist in the US tax code to promote or subsidise the production of cheap and abundant fossil fuels. Some of these subsidies have been in place for a century. While the United States has enjoyed unparalleled economic growth over the past 100 years, in large part thanks to cheap energy, the circumstances relevant at the time these subsidies were implemented no longer exist. Today, the domestic fossil fuel industries (coal, oil and natural gas) are mature and generally highly profitable. Additionally, numerous clean and renewable alternatives exist, which have become increasingly price-competitive with traditional fossil fuels.
The US government provides numerous subsidies, both direct and indirect, to the fossil fuel industry. Conservative estimates put US direct subsidies to the fossil fuel industry at roughly $20 billion per year, with 20% currently allocated to coal and 80% to natural gas and crude oil. European Union subsidies are estimated to total 55 billion euros annually. Historically, subsidies granted to the fossil fuel industry were designed to lower the cost of fossil fuel production and incentivise new domestic energy sources.
Some of the tax subsidies for fossil fuels include publicly traded partnerships, which allow pass-through oil and gas partnerships to publicly list their shares (a privilege generally reserved for higher-taxed C-corporations); amortisation of geological and geophysical expenditures associated with oil and gas exploration; accelerated depreciation of natural gas infrastructure; investment credits for clean coal facilities; and energy production credits for coal.
There is growing scrutiny of fossil fuel tax subsidies and their suitability, scale and effectiveness. These subsidies undermine policy goals of reducing greenhouse gas emissions from fossil fuels. Several international institutions, including the G20, the International Energy Agency, and the Organization of Economic Cooperation and Development (OECD), have called for the phase-out of fossil fuel subsidies.
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Renewable energy sources
The United States has been taking steps to supplement fossil fuels by investing in renewable energy sources. In 2023, renewable energy sources like solar, wind, and hydropower accounted for about 9% of total primary energy production and consumption in the US, which is a record high. This shift towards renewable energy sources is driven by the need to reduce greenhouse gas emissions and energy imports, with fossil fuels being the largest source of US carbon dioxide emissions.
Solar energy has seen a rapid increase in the US over the past decade, with solar power accounting for 1% of the nation's total energy production in 2018. While this may seem low, it is a significant increase from previous years, and solar energy continues to be a focus of renewable energy development. Wind energy is another important renewable energy source for the US, with onshore wind resources having a potential capacity of 9,124 GW and an installed capacity of over 144 GW as of 2022. Offshore wind resources also show promise, with a potential capacity of 4,249 GW.
Hydropower has been the biggest renewable energy source for the US, contributing 2.8% of total energy production in 2018. However, in 2023, hydropower generation decreased by about 6% compared to 2022. Other renewable energy sources, such as biofuels, geothermal energy, and biomass, are also gaining traction. Biofuels accounted for about 53% of total biomass consumption in 2023, while geothermal energy consumption reached a record high in the same year. Biomass, in particular, has low net CO2 emissions compared to fossil fuels, as it releases the CO2 it absorbs during growth when combusted.
The US federal and state governments have implemented various policies and incentives to promote renewable energy development. These include the Renewable Portfolio Standard (RPS) and Clean Energy Standard (CES) policies, which are projected to support an additional 300 TWh of clean electricity supply by 2030. State governments offer rebate, grant, and loan programs, as well as standards for building energy efficiency and renewable energy permitting. Feed-in tariffs (FITs) set a minimum price for renewable electricity generation, and green banks provide financing for clean energy projects.
While fossil fuels still dominate the US energy mix, the emphasis has shifted towards renewable energy sources. The development of renewable energy in the US is expected to continue to increase through 2050, playing a crucial role in reducing the country's reliance on fossil fuels and improving its energy security.
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US fossil fuel consumption
Fossil fuels—petroleum, natural gas, and coal—accounted for about 84% of total US primary energy production in 2023. The US has enjoyed unparalleled economic growth over the past 100 years, thanks in no small part to cheap energy. The US government provides tax subsidies to the fossil fuel industry to encourage domestic energy production. These include both direct subsidies to corporations and other tax benefits to the fossil fuel industry. Conservative estimates put US direct subsidies to the fossil fuel industry at roughly $20 billion per year, with 20% currently allocated to coal and 80% to natural gas and crude oil.
In 2023, fossil fuels generated 2,509 terawatt-hours of electricity, accounting for 60% of all electricity generation. Petroleum products were the most-used fossil fuels in the US in 2020, and transport was the largest consumer of petroleum. Natural gas accounted for 43% of US fossil fuel usage in 2020, mostly to generate electricity and heat. This is the largest annual share on record.
The US leads the world in natural gas liquids (NGL) production, ahead of Saudi Arabia. NGL production tripled from 2000 to 2022, now making up 9% of fossil fuels. Crude oil made up 24% of production in 2021, more than doubling since the early 2000s and even surpassing its previous peak in 1970.
While fossil fuel use remains high, consumption is falling. In 2020, total consumption of fossil fuels in the US fell by 9%, the biggest annual fall since records began in 1949. The COVID-19 pandemic and warmer weather drove the decline, according to the United States Energy Information Administration's Monthly Energy Review. While fossil fuel use falls, renewables are continuing to rise to new records. The International Renewable Energy Agency (IRENA) reported in June 2021 that renewables were now significantly undercutting fossil fuels as the world's cheapest source of power.
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Alternatives to fossil fuels
Fossil fuels, including petroleum, natural gas, and coal, have dominated the US energy mix for over a century. However, there is a growing movement to reduce reliance on these energy sources due to their environmental and geopolitical risks. The good news is that there are many alternatives to fossil fuels, and they are becoming increasingly popular as the world transitions to cleaner energy sources.
Renewable energy sources such as solar, wind, and hydropower are infinite, unlike fossil fuels, which will eventually run out. Solar energy harnesses sunlight to generate electricity through photovoltaic (PV) panels or concentrated solar power (CSP) systems. While solar energy is dependent on sunlight, which isn't always available, it doesn't cause any direct emissions and can reduce energy costs in the long run. Similarly, wind energy uses wind turbines to generate electricity, and it is also renewable, clean, and doesn't produce direct emissions. However, it depends on variable wind patterns and may have visual and land impacts.
Nuclear power is another alternative to fossil fuels. It is considered a clean energy source, but it is not renewable as it relies on fission reactions in materials like plutonium or uranium. While nuclear energy can be dangerous, as seen in the Chernobyl and Fukushima disasters, it is an efficient alternative. The main challenge is safely disposing of the radioactive waste produced.
Hydrogen is also an alternative fuel, particularly for heavy transport such as ships, trucks, and aircraft. Biomass, which is biological material that is either living or decaying, is another option. While burning biomass produces greenhouse gases, it is still cleaner than fossil fuels, and many coal-fired plants are being converted to biomass to reduce emissions. Geothermal power, which harnesses the Earth's natural sources of heat, is also an alternative, although it is restricted to areas with volcanic sources.
The transition to these alternative energy sources is gaining momentum, with renewable energy sources becoming increasingly affordable and efficient. In 2020, alternative energy sources accounted for 23.2% of all energy sources for power generation. This shift is creating jobs, with almost 35 million people employed in the renewable energy sector worldwide in 2023. As the world moves towards net-zero emissions, it is expected that the energy sector will see a net gain in jobs, with 14 million new positions in clean energy by 2030.
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Frequently asked questions
Fossil fuels are energy sources formed in the Earth’s crust from decayed organic material. They include petroleum, natural gas, and coal.
Fossil fuels have dominated the USA's energy mix for over 100 years. In 2019, fossil fuels accounted for 80% of the USA's energy production and consumption. In 2023, this figure fell to 60%.
The USA has been developing alternative energy sources such as solar and wind power. In 2019, renewable energy consumption surpassed coal consumption for the first time. However, in 2023 and 2024, the cost of renewable LCOE rose.
Yes, the USA provides tax subsidies to the fossil fuel industry, including direct subsidies to corporations and other tax benefits. These subsidies have been in place for over a century. However, there is increasing scrutiny and criticism of these subsidies due to their negative environmental and health impacts.
While there have been discussions among both Democratic and Republican lawmakers about repealing fossil fuel subsidies, no significant action has been taken. Instead, fossil fuel subsidies are increasing.
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