The vast subsidy derives largely from polluters not paying the costs
imposed on governments by the burning of coal, oil and gas. These
include the harm caused to local populations by air pollution as well as
to people across the globe affected by the floods, droughts and storms
being driven by climate change.Lord Nicholas Stern, an eminent climate
economist at the London School of Economics, said: “This very important
analysis shatters the myth that fossil fuels are cheap by showing just
how huge their real costs are. There is no justification for these
enormous subsidies for fossil fuels, which distort markets and damages
economies, particularly in poorer countries.
Stern said that even the
IMF’s vast subsidy figure was a significant underestimate: “A more
complete estimate of the costs due to climate change would show the
implicit subsidies for fossil fuels are much bigger even than this
The IMF, one of the world’s most respected financial
institutions, said that ending the subsidies to fossil fuels would cut
global carbon emissions by 20%. That would be a giant step towards
taming global warming, an issue on which the world has made little
progress to date.
Ending the subsidies would also slash the number of premature deaths
from outdoor air pollution by 50% – about 1.6m lives a year.
the IMF said the resources freed by ending fossil fuel subsidies could
be an economic “game changer” for many countries, by driving economic
growth and poverty reduction through greater investment in
infrastructure, health and education and also by cutting taxes that
Another consequence would be that the need for subsidies for renewable
energy – a relatively tiny $120bn a year – would also disappear, if
fossil fuel prices reflected the full cost of their impacts.
estimate of $5.3tn in fossil fuel subsidies represents 6.5% of global
GDP. Just over half the figure is the money governments are forced to
spend treating the victims of air pollution and the income lost because
of ill health and premature deaths. The figure is higher than a 2013 IMF estimate because new data from the World Health Organisation shows the harm caused by air pollution to be much higher than thought.
is the dirtiest fuel in terms of both local air pollution and
climate-warming carbon emissions and is therefore the greatest
beneficiary of the subsidies, with just over half the total. Oil,
heavily used in transport, gets about a third of the subsidy and gas the
The biggest single source of air pollution is coal-fired power stations
and China, with its large population and heavy reliance on coal power,
hosts $2.3tn of the annual subsidies. The next biggest fossil fuel
subsidies are in the US ($700bn), Russia ($335bn), India ($277bn) and
Japan ($157bn), with the European Union collectively allowing $330bn in
subsidies to fossil fuels.
These numbers are fucking insane…