Associated Press: "In US, States Struggle to Replace Fossil Fuel Tax Revenue"
This widely syndicated story features findings from a January 2022 working paper about the fiscal implications of the energy transition and quotes the paper's lead author, Fellow Daniel Raimi.
Federal, state and local governments receive an estimated $138 billion a year from the fossil fuel industry, according to a study from the Washington-based nonpartisan economics group Resources for the Future, which does not advocate on energy policies. That’s equivalent to the annual state spending of New York and Texas combined.
The cashflow is dominated by gasoline and diesel retail taxes in every state, but energy-producing states have the deepest dependence on fossil fuel income through a gamut of taxes, royalties, lease sales and fees. Because that revenue helps pay for government services, they tend to tax residents less, said Daniel Raimi, a fellow at Resources for the Future, and co-author of the study.
“That’s a really challenging dynamic if you think about a shift away from fossil fuels,” he said. “They’re going to be faced with the question: Do we raise our taxes on our residents or do we reduce the level of services we provide?”
Daniel Raimi is a fellow and director of the Equity in the Energy Transition Initiative at RFF. He works on a range of energy policy issues with a focus on tools to enable an equitable energy transition.
Senior Research Analyst
Sophie Pesek is a research analyst for the Climate Risks and Impacts and Adaptation and Resilience programs at RFF.
Working Paper — Jan 13, 2022
The Fiscal Implications of the US Transition Away from Fossil Fuels
This working paper estimates the fiscal risk posed by the energy transition for governments dependent on fossil fuels, while examining policies to address this risk to revenues.
Press Release — Jan 13, 2022
US Revenues from Fossil Fuels, Responsible for $138 Billion Annually, Expected to Fall Regardless of Climate Action
Fossil fuels provide substantial revenue to the US federal government and many states, tribes, and localities—but changes to government tax policies can help replace declining revenue and help communities adapt.
Common Resources — Dec 21, 2022
RFF’s Top Stories of 2022
As 2022 winds down, the editorial team at Resources for the Future has reviewed the past 12 months of blog posts, magazine articles, and podcast episodes and curated a selection of notable pieces from the year.