The US Senate has introduced a tax break exceeding $1bn for oil and gas producers in President Donald Trump’s latest fiscal package.

This initiative is expected to permit companies subject to a 15% corporate alternative minimum tax to deduct specific drilling costs from their taxable income.

It also proposes cuts to tax credits for renewable energy sources including wind, solar, electric vehicles and hydrogen.

Energy giants such as ConocoPhillips, Ovintiv and Civitas Resources have been vocal supporters of this initiative.

The tax break for drilling costs closely mirrors a piece of legislation by Republican Senator James Lankford, who represents Oklahoma, a leading state in oil and gas production.

Senator Lankford's bill, titled the Promoting Domestic Energy Production Act, is projected to cost the US Government approximately $1.1bn over a decade, as per the Tax Foundation's analysis based on figures from the Joint Committee on Taxation.

Lankford expressed the necessity of his bill to protect independent oil and gas producers from the financial pressures imposed by the Corporate Alternative Minimum Tax, which was implemented under former President Joe Biden to discourage corporations from exploiting deductions and credits to evade taxes.

Lankford was quoted as saying: “If we can’t get rid of that entirely we at least need to give some relief to those folks who are independent producers. We need to be able to get some relief to them so they are not constantly worried about it.”

The Senate's proposed tax break, however, has faced criticism from some Democratic lawmakers, environmental organisations, and watchdog groups such as Friends of the Earth and Public Citizen, who have labelled it a concession to the fossil fuel industry.

Conversely, the measure has garnered support from the Domestic Energy Producers Alliance, as well as the American Exploration & Production Council.

American Exploration & Production Council CEO Anne Bradbury said: “America and the world need affordable, reliable energy – and this common-sense legislation will enable domestic producers to more quickly invest in production and meet this critical need.”

Earlier this month, Trump announced plans to repeal restrictions that Joe Biden implemented on oil drilling in Alaska's National Petroleum Reserve.