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In his 2011 budget proposals, President Barack Obama has delivered on his promise to end subsidies to oil, gas and coal producers, and funnel the funds into nuclear and renewable energy sources instead.

The budget calls for the cancellation of over $2.7bn in subsidies for the fossil fuels industry, aiming to discourage further exploration for them, their production and use.

The budget document says funding should end “for programmes that provide inefficient fossil fuel subsidies that impede investment in clean energy sources and undermine efforts to deal with the threat of climate change."

The budget also proposes scrapping the $71m expansion of the US Strategic Petroleum Reserve, and awarded $21m to funding the Mandatory GHG Reporting Rule.

The fossil fuel industry has previously been the beneficiary of generous subsidies, mostly in the form of tax breaks for producers. According to a report published in September 2009 by the Environmental Law Institute, the US government spent $72.5bn on fossil fuel subsidies over the period 2002-8, versus $29bn on incentives for renewable energy sources.

If the 2011 budget is approved, the nuclear and renewable sectors stand to gain at the expense of fossils with $36bn in new loans authorised for nuclear power facilities, and $500m in credit subsidy to support up to $5bn in loan guarantees for energy efficiency and renewables.

In total, over $2.3bn is stumped up for energy efficiency and renewable energy programmes, including $302m for solar energy, $220m for biofuels and biomass, $325m for green vehicles, and $231m for energy-efficient buildings.

The American Petroleum Institute has lobbied hard against the proposals – which also made an appearance in 2010's budget proposal – on the ground they will raise energy prices and destroy jobs.

The President renewed his aim to reduce GHG emissions to more than 80 per cent below 2005 levels by 2050, backed up by $43m in funding for regulatory initiatives to control emissions under the existing Clean Air Act.