Over 50 groups call on Gov. Newsom to cut fossil fuel subsidies

Environmental and consumer groups call on Governor Newsom to cut fossil fuel subsidies instead of clean transportation and clean energy funding in the state budget.

Clean energy

Letters & Testimony


On Friday, 51 groups sent a letter calling on Governor Gavin Newsom to cut tax subsidies for oil and gas while maintaining funding in the state budget for clean transportation and clean energy programs. The Governor’s January budget proposal would cut $6 billion in investments meant to stave off the worst impacts of the climate crisis. Rather than cutting these important programs that protect California’s air, climate, and public health, the Governor should instead cut subsidies and tax expenditures for oil and gas, which work against these critical goals.

Ending subsidies for the oil and gas industry is consistent with the state’s climate goals and could provide an important alternate source of revenue to continue to ensure California leads the way on climate. We can protect the funding needed to combat climate change and protect communities by cutting subsidies for major polluters. Read the letter to Gov. Newsom below:

Letter and Signers:


Dear Governor Newsom,

We applaud your recent leadership to take on Big Oil and rein in gas price gouging during the special session. Given your leading voice in aligning California policy with the State’s climate policies, we wanted to bring another matter to your attention.

In January you forecasted the State budget deficit at $22 billion. To help balance the budget you proposed several funding shifts and cuts, eliminating $6 billion in climate spending from last year’s $54 billion five year climate commitment. We understand the State must balance the budget, but core programs — which include investments needed to achieve the state’s climate goals — should be protected on an ongoing basis, not just in a budget surplus year.

The Department of Finance annually reports on tax expenditures. We’d like to request that your Administration review all current tax expenditures both specifically for the oil and gas industry and broader corporate tax expenditures that the oil and gas industry benefit from and utilize.  

Specifically, we request that the Administration estimate the value and eliminate the following significant tax benefits that are currently benefiting the oil and gas industry using North American Industry Classification System (NAICS) codes for the following corporation tax expenditures:

  • Water’s Edge Election ($5 billion for all industries): Water’s Edge Election is a tax expenditure that allows multinational corporations to compute the income attributable to California on the basis of a water’s edge or domestic-only combined report, as opposed to a worldwide combined report. This allows a corporation to elect to compute its California tax by reference to only the income and factors of a limited number of entities. 
  • Research and Development Credit ($3 billion for all industries): Corporations are allowed a credit for research expenditures.
  • Accelerated Depreciation of Research and Experimental Costs ($90 million for all industries): Corporations are allowed the option to deduct research and experimental costs currently or amortized over a 60-month period.

We also request that the Administration further eliminate the following additional tax expenditures that currently benefit the oil and gas industry:

  • Corporate tax: Percentage of Depletion of Mineral and Other Natural Resources ($10 million) 
  • Corporate tax: Intangible Drilling Cost Expensing ($6 million)

Finally we request that the Administration restrict the following tax expenditure from benefitting the oil and gas industry:

  • Sales tax: Exemption for Manufacturing and Research and Development Equipment ($495 million for all industries)

We can protect the funding needed to combat climate change and protect communities by cutting subsidies for major polluters. Your proposed budget makes cuts to critical investments for zero-emission-vehicle acceleration programs, sustainable transportation infrastructure, clean energy programs, and equitable building decarbonization, community resilience, among others. 

Ending subsidies for the oil and gas industry is consistent with the state’s climate goals and could provide an important alternate source of revenue to continue to ensure California leads the way in staving off the worst impacts of climate change. Ongoing savings associated with excluding the oil and gas industry from utilizing these tax expenditures (after calculating the benefit to Proposition 98) should be utilized to fund climate programs that were cut or delayed in the January Budget as part of the 2023-24 Budget Act. The statutory changes can be contained within a trailer bill to effectuate these changes.

Now more than ever, we must maintain our commitment to programs that safeguard communities from the impacts of climate change while building a clean energy economy. 


Laura Deehan

State Director, Environment California


Arnold Sowell Jr.,

Executive Director, NextGen California


Bill Magavern

Policy Director, Coalition for Clean Air


Liza Tucker,

Consumer Advocate, Consumer Watchdog


Bill Allayaud

California Director of Government Affairs,

Environmental Working Group


Victoria Rome

California Government Affairs Director,

Natural Resources Defense Council


Amee Raval

Policy & Research Director, Asian Pacific 

Environmental Network


Ellie Cohen

CEO, The Climate Center


Brandon Dawson

Director, Sierra Club California


Robert M. Gould, MD

Board President, SF Bay Physicians for Social



Dominic Frongillo

Co-Founder and Executive Director,

Elected Officials to Protect America


Mike Young

Political & Organizing Director,

California Environmental Voters


Kevin D. Hamilton

Co-Executive Director, Central California Asthma



Sneha Ayyagari

Clean Energy Initiative Program Manager,

The Greenlining Institute


Cesar Aguirre

Oil and Gas Director, Central California

Environmental Justice Network


Katelyn Roedner Sutter

California State Director, Environmental Defense



Bahram Fazeli, Policy Director

Communities for a Better Environment


Jenn Engstrom

State Director, CALPIRG


Nicole Capretz

Founder and CEO, Climate Action Campaign


Daniel Barad

Western States Policy Manager, Union of

Concerned Scientists


Jenna Tatum

Executive Director, Building Electrification Institute


Ilonka Zlatar

Organizer, Oil and Gas Action Network


Bruce Hodge

Chair, Carbon Free Palo Alto & Carbon Free Silicon



Ector Olivares

Program Manager – Environmental Justice,

Catholic Charities of Stockton


Chirag G. Bhakta

California Director, Food & Water Watch


RL Miller

President, Climate Hawks Vote


William B. Wolpert

Architect, Green Building Architects


Leslie Alden

Executive Director, Drawdown Bay Area


Diane Bailey

Executive Director, Menlo Spark


Benjamin Eichert

Director, Let’s Green CA!


Nathan Taft

Senior Digital Campaigner, Stand.earth


Teresa Bui

Climate Policy Director, Pacific Environment


Kathleen Kramer, MD

Co-Founder, Project Green Home


Joyce Lane

Board President, SanDiego350


Shoshana Wechsler

Co-Coordinator, Sunflower Alliance


Eileen Mitro

Coordinator, Climate Action Mendocino


Cheryl Weiden

Steering Committee Member, 350 Silicon Valley


Annie Stuart

Steering Committee Member, 350 Petaluma


Pauline Seales

Organizer, Santa Cruz Climate Action Network


Michael J. Painter

Coordinator, Californians for Western



Andrew Truman Kim

Chair, Innovation & Sustainability PAC


Susan Morgan

Founder, Indivisible Marin


Iwalani Faulkner

Director, Equity Transit


Cynthia Kaufman

Coordinator, Pacifica Climate Committee


Veronica Wilson

California Organizer, Labor Network for



Sven Thesen

CEO, BeniSol, LLC


George Beeler

Principal Architect, AIM Associates


Gopal Shanker

President, Récolte Energy


Karen Cederholm

Climate Justice Policy Intern, Hammond Climate

Solutions Foundation


Bart Ziegler

President, Samuel Lawrence Foundation


Steven King

Clean Energy Advocate, Environment California

Steven leads Environment California’s campaigns to increase clean, renewable energy throughout the Golden State, spearheading efforts to transition away from dangerous fossil fuels and address climate change. Steven lives in Los Angeles where he enjoys spending time outdoors, watching his favorite L.A. sports teams, and playing the trombone.

Laura Deehan

State Director, Environment California

Laura directs Environment California's work to tackle global warming, protect the ocean and fight for clean air, clean water, open spaces and a livable planet. Laura stepped into the State Director role in January, 2021 and has been on staff for over twenty years. She has led campaigns to make sure California goes big on offshore wind and to get lead out of school drinking water. As the Environment California Field Director, she worked to get California to go solar, ban single use plastic grocery bags and get on track for 100% clean energy. Laura lives with her family in Richmond, California where she enjoys hiking, yoga and baking.

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