Charles Rotter
Dr. Matthew Wielicki’s article, “The $7 Trillion Lie,” is a scathing exposé of what may be one of the most brazen accounting tricks in the climate policy playbook. For years, the International Monetary Fund (IMF) and its ideological allies have floated the claim that fossil fuels receive a jaw-dropping $7 trillion per year in global subsidies. But as Wielicki makes abundantly clear, this figure is not just inflated—it’s fabricated, repackaged propaganda masquerading as economic analysis.
“It is one of the most effective talking points in the climate activist arsenal… and one of the most dishonest,”
Wielicki states plainly. And he’s right. This dubious figure is the linchpin for green energy slush funds, carbon taxes, and regulatory overreach worldwide. It’s the rhetorical battering ram used to justify some of the most sweeping—and costly—interventions in modern economic history.
To understand the sleight of hand at play, Wielicki unpacks how this $7 trillion myth was born. Only a fraction of that amount—less than one-fifth—is actual government spending. “The rest? That’s where the con begins. It’s a clever sleight of hand…” he writes. Indeed, the majority of the number is built on “implicit subsidies”—a bureaucratic fiction concocted by economists to represent hypothetical costs, like the so-called “social cost of carbon.” These are not checks written to ExxonMobil; they are estimates loaded with assumptions and guesswork.
If you want real numbers, Wielicki points readers to the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA). Their data shows that actual fossil fuel subsidies—the kind you can trace in a budget—amount to $500 to $700 billion per year, and mostly occur in developing nations like Venezuela, Iran, and Indonesia. In these places, fuel subsidies are a matter of economic stability, not environmental sin.
In contrast, Western nations have been pouring taxpayer money into the black hole of green energy. As Wielicki highlights with stark clarity, “solar received 205 times more [federal subsidies] than oil and gas between 2010 and 2019” on a per-unit-of-electricity basis. The graph on page 5 makes this discrepancy obvious, showing that solar receives $70 per MWh, while oil and gas limp along with $0.39 per MWh.
What’s more, the Inflation Reduction Act alone is responsible for over $70 billion in direct subsidies to renewables. This isn’t investment—it’s dependence. As Wielicki quips, “The moment the handouts stop, the industry collapses.” Offshore wind contracts are being scrapped across the East Coast. Siemens and Vestas are hemorrhaging billions. Battery storage is underperforming. Yet the subsidies continue to flow—because the myth of fossil fuel welfare must be sustained.
And herein lies the true motivation for this deception. As Wielicki notes, “Because the $7 trillion claim gives climate bureaucrats and green lobbyists the cover they need. If you can convince the public that fossil fuels are rigging the system with trillions in subsidies, then handing another $100 billion to solar farms that stop working at sundown feels like justice”.
But the reality is far less noble. Fossil fuels, which still supply over 80% of global energy—as the chart on page 6 shows—receive less support per unit of energy than any other sector. They keep the lights on, the hospitals running, and the supply chains moving. And they do it while being demonized by elites who jet to climate conferences to scold the rest of us for driving to work.
What Wielicki delivers here is more than a critique—it’s a forensic audit of ideological corruption masquerading as environmental concern. He methodically dismantles the flimsy scaffolding that supports the $7 trillion narrative and exposes it for what it is: a financial fairy tale designed to redistribute wealth under the guise of planetary salvation.
And the punchline?
“Because the only thing more dangerous than a bad idea… is when you’re forced to fund it”.
This is precisely the kind of myth-busting that’s needed to unmask the technocratic overreach powering the green energy grift. Wielicki’s article doesn’t merely challenge a statistic—it challenges an entire worldview built on manipulating fear and fudging numbers to engineer social and economic transformation.
Let this article be Exhibit A in the case against climate policy by fiat. And remember: when someone tells you fossil fuels are living off your tax dollars, ask them to show the receipts. Odds are, they’re pointing to a spreadsheet full of make-believe.
The Original article can be found on Dr. Wielicki’s substack.
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It would really be nice if road taxes applied to fuels were really used to maintain roads.
Also a tax wrote off is not a subsidy, but a reduction in dollars paid. This all business has. It would be nice to know the true net for both. I think that wind and solar are a net subsidy, receiving far more then any tax paid, while fossil fuel companies definitley are net payers.
Here in San Diego; a significant amount of road taxes are used to erect bollards and apply green paint, in order to eliminate lanes and parking which automobile drivers can use and replace them with bicycle lanes within which one rarely sees a bicyclist.
Here, too, but also have been building undersized one-lane roundabouts that during heavy traffic only allow the strings of vehicles from the busier street to enter.
Oh, yeah, every corner is getting bump-outs so that the curb lane can’t be used for right turns. In rainy weather they are invisible, and I lost a wheel to one when they first started randomly sneaking them in.
Yeah. Imagine “costs”. Then, as fossil
fuels are not paying those costs, it is a “subsidy”.
This is distinct from deliberately misstating accounting, where the ability of the producer to calculate their net taxable profit is misstated.
I have seen the Green Blob do both, with Social Cost of Carbon treated as a real thing, and business accounting treated as stealing from The People (or Das Volk, given the orientation of some Greens).
Now all they need to add is the environmental cost of covering the landscape with wind and solar “farms” and the damage to environments while mining and processing the material needed for “green” energy. Oh, and of course, the damage when industrial size battery storage systems burn. Those are real things!
and the addded cost of fossil fuels due to government regulations reducing there income and generation, but not their operating costs.
How much money does the U.S. government give oil and gas companies? Any at all? A little detail would be appreciated.
Tax breaks are not the same thing as the government paying out money to a company.
Most tax rulings apply to every company … even green energy companies use them.
TA I just researched your question and posted the answer in a comment below. The correct US answer is ZERO.
No it’s not. It’s negative. All developed countries’ governments require fossil fuel royalties and taxes to survive.
Virtually $0 other than ‘normal’ industrial tax credits e.g. writing off manufacturing costs etc. that any company takes.
Did a little research before commenting. For the US, IMF claims the fossil fuel subsidies were $757 billion for 2022. These comprise two components:
Consider the explicit fossil fuel subsidies.
IMF says comprise mainly (a) ‘direct funding’ via federal land leasehold subsidies below market, and (b) tax breaks.
Claimed ‘direct funding’ is a myth.
By law, BLM must competitively offer leases only to the highest bidder subject to fixed statutory minimums for initial payment, annual rental thereafter, plus production royalty (which can result in no bids for an offered tract). So by definition, leases are at market and not subsidized.
Claimed tax breaks are mainly the depletion allowance established in 1926. Except that is conceptually identical to plant and equipment depreciation—which nobody thinks is a manufacturing subsidy.
So even the token 1% ‘explicit’ US ff subsidies do not exist in reality.
It is WORSE than the post suggests in the US.
Thank you, Rud, for putting in that response. While similar research has been presented before, it needs to be repeated at least as often as the Left presents their lies, or people will begin to think the left has a valid point.
per Grok after asking the correct questions Fossil fuels pay a net ~$0.054–$0.056/kWh to the government, reflecting their high tax contributions despite grid priority costs. Wind and solar receive a net ~$0.077–$0.085/kWh in subsidies, driven by direct subsidies (PTC, ITC, IRA) and grid priority benefits, with low tax contributions due to ~30% nameplate efficiency and smaller market share.
here is the breakdownFossil Fuels:
Wind and Solar:
note this does not include what the lowered price of electricity would be if coal and NG were able to operate at their full 90 plus percent effcieny, or the cost of electricity going negative due to wind and solar, or the cost of black outs due to wind and solar. It certainly does not credit fossile fuels for 15 percent of all agricultural due to atmospheric fertilization,
Conclusion: Fossil fuels’ 15% CO2-driven crop yield increase adds $36.9 billion/year, with nitrogen fertilizers and pesticides contributing another ~$196.8 billion/year, totaling ~$233.7 billion/year ($0.0126/kWh for total energy). Combined with net taxes of $130–134 billion/year ($0.0070–$0.0072/kWh), fossil fuels’ total economic contribution is ~$363.7–$367.7 billion/year ($0.0195–$0.0197/kWh), far exceeding wind and solar’s net subsidy cost of $42–47 billion/year (~$0.077–$0.085/kWh). Severance taxes and royalties remain significant tax components.
Yep.
Coal Gas and Nuclear generation are powered by Coal, Gas and Uranium
Wind and Solar are powered by Subsidies…Urentium
I am a CPA with specialization in federal and state taxations with an emphasis in oil and gas taxation
The only actual “subsidy” is percentage depletion in excess of basis.
There is time value of money subsidy for the current expensing of Intangible drilling costs (IDC). Its only a subsidy in the fact that it is all deductible in year one (1) instead of being deducted over a long period. Again, the subsidy is only a time value of money subsidy.
All the other “subsidies” are flat out BS.
At the same time, the advocates listing the subsidies omit
A) the state and federal severance taxes paid on the gross revenue (not net income). The state and federal severance tax ranges from 3%-8% depending on the state or federal lands.
B) if the property (well) is located on Federal lands, the federal government has a royalty interest ranging from 12.5% to 20% of the revenue, yet incur none of the drilling or operating costs. ie a 12.5%-20% net revenue interest but zero working interest share.
Nitrogen Fertilizers (Haber-Bosch Process):
Any cost that has to be amortized over time, is a subsidy to the government. It means government gets to hang on to your money for a few years before giving it back.
In order to assess the income tax, taxpayers must first determine what their income is. The income tax is not a tax on gross receipts from the operation of a business. Taxpayers must subtract their cost of doing business. One of the most difficult problems in this process is matching the cost of long lived assets to periodic income. For plant and equipment taxpayers are allowed to amortize a portion of the initial cost every year–that is called depreciation.
Depletion of natural resources is similar to depreciation of deteriorating assets: it is a tax deduction based on the using up of the resource by mining minerals, quarrying stone, drilling oil and gas, and felling timber. a taxpayer using cost depletion amortizes the cost of natural resource investments over their total productive lives. The method of percentage depletion requires a taxpayer to deduct deduct a statutory percentage of the gross income generated from the natural resource property, regardless of actual costs incurred. Percentage depletion can be used for gross income from coal and metal mines, nonmetal mines, and natural mineral deposits. Percentage depletion is also allowed for oil and gas wells subject to restrictions.
Current tax law limits the use of percentage depletion of oil and gas in several ways. First, the percentage depletion allowance may only be taken by independent producers and royalty owners and not by integrated oil companies. Second, depletion may only be claimed up to specific daily American production levels of 1,000 barrels of oil or 6,000 mcf of natural gas. Third, the deduction is limited to 65% of net taxable income. Fourth, the net income limitation requires percentage depletion to be calculated on a property-by-property basis. Percentage depletion is limited to the the net income from a particular property.
Yes, this is exactly right. Depletion allowances are so far from being subsidies that to present a company’s accounts without showing depletion as a cost would be committing accounting fraud.
It would be, in effect, pretending that the gas, oil, coal or ore being extracted was an unlimited supply – that the field will never run out. It would be overstating profit by leaving out costs. People go to jail for doing that.
Of course, once you show costs in your income statement, that reduces profits, and so reduces the amount of tax you would pay were profits higher and costs lower.
But argue that this means that depletion allowances, or indeed any form of depreciation complying with GAAP (Generally Accepted Accounting Principles) are subsidies? That’s just accounting and business management illiteracy.
Great find! But …
Maybe this could’ve been worked into the Headline:
[ One could imagine that coal ‘subsidies’ are actually negative, if there could be such a thing. Consider:
Coal-fire power generation at ~ +2 cents / kWh wholesale price; vs.
Photovoltaic at (-) 7 cents-per-kWh, deducted from producers’ costs. ]
Also really liked that the author pointed out this uncomfortable factoid:
Perhaps Mexico could join this dishonorable list, as exposed by the ‘crisis de gasolina en mexico’, the well-organized tapping of the (refined) fuel pipelines. Not just a domestic affair, as we’ve learned recently that some of the stolen gasoline is transported (guess how?) for sale in South Texas, for an extra mark-up in returns.
Not to mention, the direct funding subsidies from government for construction of windmills and solar fields, and the debt guarantees underwritten by government?
Fossil fuels, particularly oil and it’s derivatives, are the most highly taxed products ever. If all taxes from fossil fuels were to be stopped, all developed, and most other countries would be bankrupt within days.
Tobacco?
Just one example of how absurd the $7 trillion figure is, consider this. Total worldwide revenues from petroleum, natural gas, and coal is $7.9 trillion. It’s absurd to think governments subsidies the products equal to worldwide revenues. It’s absurd.
“$500 to $700 billion per year, and mostly occur in developing nations like Venezuela, Iran, and Indonesia.”
That’s a relief…only over half a trillion. Whew.
Why TF is the US Taxpayer subsidizing fossil fuel production in “developing” nations?
Venezuela? They used to be one of the most affluent nations in South America and the World. US Oil companies had invested billions into developing their oil and gas industry.
Then they elected a Socialist government who, in fairly short order, “nationalized” the oil industry…meaning they stole all the infrastructure, equipment and capacity that US oil companies had built and were providing massive income to the country, then promptly ran it into the ground.
But in spite of that US taxpayers are subsidizing their oil and gas industry? WHY?
If private oil companies want to invest in “developing nations”, more power to them. I hope they make a profit and don’t have their investments stolen from them. But there is no freaking way the US taxpayer should be doing it…and especially in a government that’s already stolen those types of investments once in the past, squandered them, and turned themselves from one of the most affluent economies in the world into a “third world” shithole within a couple of decades.
I get that this article is highlighting the fact that the anti-fossil fuel crowd is overstating things, but the proper amount of subsidies that the US should be providing to the oil and gas industry is zero.
Nobody said that the US taxpayers were the ones providing the subsidies, just that subsidies were allegedly being paid. In the case Venezuela, Iran and Indonesia, the respective governments are the ones providing the subsidies.
And these “subsidies” are usually in the form of lower-than-global-market prices for native consumers of electricity, gas and oil. That’s a subsidy for their citizens, not the industry.
Then of course there is Norway, where basically everything is massively subsidised by oil income.
The amount they provide is as close to zero as it is for any business. There are deductions and write offs etc that are allowed like any business that is about it.
If there’s a social cost of carbon, shouldn’t it be weighed against a social benefit of carbon?
Are those pesky hydrocarbons that 8 billion people seem intent on eating everyday included in the social cost?
No hydrocarbons, no people, which is bad for tax revenue.
Of course it should, and it is ‘objectively’ measurable as opposed to the SCC which is purely subjective and made up. The SBC can be calculated from Global GDP (~$110T) & noting that global use of fossil fuels for energy is ~80% meaning the SBC is ~$88T. So even IF the total subsidies really were $7T (it isn’t) that’s still a greater than 10 to 1 return on investment. Anyone would take that any time & twice on Sundays.
Michael Dombroski
July 6, 2025 9:41 am
“If there’s a social cost of carbon, shouldn’t it be weighed against a social benefit of carbon?”
Absolutely
Life expectancy in 1800 was about 40 years
Life expectancy in 1900 was about 50 years
life expectancy in 2000 / 2024 is about 78 years.
In 1800 it took 20 minutes of human labor to plow/plant/seed/weed/harvest/mill sufficient wheat to make one loaf of bread
In 1900 it to about 10 minutes of human labor to plow/plant/seed/weed/harvest/mill sufficient wheat to make one loaf of bread.
today it takes about 2 secs to accomplish the same.
Machinery and fossil fuels brought forth these advancements and the massively higher standard of living we enjoy today.
Michael, do you have a reference for the harvest estimates?
Nitrogen Fertilizers (Haber-Bosch Process):
Trouble is, the big lie of “fossil fuel subsidies” has traveled ten times around the world before the truth that they are nonexistent has gotten out of bed.
What is perhaps most interesting about Dr. Wielicki’s article is that the graph of ‘consumption subsidies’ points to an article expressly arguing (or ‘accepting’) that the $7T number is somehow useful and try’s to present ways that the ‘externality costs’ should be addressed via taxes, carbon credits, e.g. applying the ‘social costs of carbon’ in some fanciful way. (https://ourworldindata.org/how-much-subsidies-fossil-fuels)…
The 2 most egregious ‘externality costs’ are 1) Climate Change @ur momisugly 30% & 2) Road Use (costs due to accidents & congestion @ur momisugly 17%. The former is being fundamentally debated & has not been shown to have any significant costs vs benefits (global greening thus more food). The latter is simply stupid since if you replace all ICE vehicles with electric you’d have to apply those to the electric side of the equation and they’d likely be higher due to electric vehicles being heavier and more costly to repair.
The whole climate craziness is a sham, all the way down. The faster we can get rid of it the faster we can address real problems like food distribution and helping Africa get out of the dark ages by promoting their use of high density energy sources.
To whatever extent enhanced CO2 has caused warming, that makes growing seasons longer allowing more food to be grown as well.
Governments get HUGE amounts of taxes from Coal, Gas and Oil.
How much tax to they get from wind and solar ?
This is important information.
The climate changers don’t mind subsidising fossil fuels whenever their dodgy fickles dumping is exposed-
Fears for WA’s energy grid as Griffin Coal slides almost $1 billion further into debt
They talk the talk but go walkabout whenever the lights are threatened.
re: the social cost of carbon: It isn’t a cost, it’s a benefit. Just add up the increase in plant life and ocean life over the last couple of decades, and things like less temperature-related deaths, and there is easily a net benefit. And this doesn’t take into account the last couple of centuries with dramatically increased living standards, longevity, etc. Oh yes, and then add in the fossil-fuel-specific taxes.
It is a common tactic to defect attention away from oneself by laying claims your opponent is allegedly doing exactly what you are.
Wielicki is such a sore loser.