Earth Week marks the annual reminder of our responsibility to leave the planet in better shape than we inherited it. This year, it falls amid stark reminders that we are failing another moral obligation: fiscal responsibility. With Congress accomplishing little more than spending other people’s money these days, fiscal and environmental responsibility are seldom viewed as compatible agendas. But taxpayer and green interests share an intertwined fate. 

Alarm bells ring louder than ever over the health of our planet and public finances. The globe is hurtling toward warming thresholds with adverse impacts multiplying. Meanwhile, the United States is on a trajectory to exceed record public debt within the decade, threatening the country’s economic security. Reconciling these twin problems requires understanding two lessons. 

First, we cannot subsidize our way to a stable climate. Such thinking is uncommon in today’s green theology, which explains why greens and taxpayers have quarreled more than they’ve partnered. Nothing punctuated this more than the Inflation Reduction Act, widely considered the most significant climate legislation ever passed. Yet most of the funds are a wealth transfer from taxpayers to companies to build mature clean energy technologies they otherwise would have built. The result: oversold emissions cuts and poor returns for taxpayers. 

Unsurprisingly, taxpayer groups opposed IRA from the outset and continue to call for “pruning green subsidies.” IRA may be water under the bridge if it were a one-time payment of $370 billion, as Congress intended. However, the reality is an overlooked condition of an IRA provision may enable subsidies indefinitely, costing taxpayers trillions of dollars. 

Tough spending cuts are inevitable to restore fiscal balance, and cutting green corporate welfare is low-hanging fruit. Environmentalists are already gearing up to prevent IRA reform, but they would better serve their cause by prioritizing regulatory reform and spurring innovation. One category of regulatory reform alone, electric transmission, could lower emissions more than the IRA. Meanwhile, downsizing federal energy spending can be done in a manner that improves climate outcomes by reducing subsidies for mature technologies far more than spending increases for research and development. 

Pro-environment subsidy reform runs much deeper than this, which brings us to the second lesson: taxpayers and environmentalists are potent yet underutilized bedfellows. 

Fortunately, we are not starting from scratch. Green Scissors, a coalition of taxpayer and environmental groups, targets the removal of $350 billion in polluter subsidies. This underscores how fiscal leaders can be environmental leaders. These and other diverse stakeholders from across the political and policy spectrum scored a major win in 2012 with a successful Senate vote and subsequent expiration of the volumetric ethanol excise tax credit.

This style of collaboration continues. Five prominent fiscal organizations repeatedly rallied to oppose coal subsidy carve-outs in defense appropriations bills. More recently, a group of “strange barnfellows” has also rallied around “sensible” farm bill principles with the goal of eliminating or reforming costly agriculture subsidies that tend to undermine conservation efforts or environmental goals. 

Removing subsidies can not only mitigate environmental problems but bolster adaptation. Consider that reforms to programs such as the National Flood Insurance Program would reduce social and economic consequences of climate-related disasters while saving taxpayers tens of billions of dollars. The granularity and complexity of climate risk beg for a bottom-up market approach to minimize the human suffering of climate change.

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This requires freer markets where insurers are allowed to price risk accurately without battling counterproductive subsidies. Alliances of taxpayer and environmental interests, such as the SmarterSafer Coalition, are making this dream closer to reality. 

A glimpse of fiscal and environmental progress was provided by the Fiscal Responsibility Act of 2023. The package to raise the debt limit included new discretionary spending limits and environmentally beneficial permitting reform. Such measures to cut public spending and red tape present a positive omen for a more fiscally and environmentally responsible future. 

Devin Hartman is the R Street Institute’s director of energy and environmental policy. Nan Swift is a resident fellow with R Street’s governance program.