Yes, you read that right. According to a new report from the International Monetary Fund, governments around the world are giving in direct and indirect aids up to 1,900 billion USD ( 1,500 billion euros ) to fossil fuels subsidies each year.
This total to 2.5 percent of global GDP. More importantly, ending those subsidies would lead to a drop of 13 percent of total carbon dioxide emissions. Now you understand why I have advocating doing so for the past few years.
The United States of America alone are handing nearly half a trillion dollars in subsidies. China and Russia are following with $279 billion and $116 billion, respectively.
The Middle East and North African nations make up more than half of the pre-tax subsidies, which globally amounted to $480 billion. This is a huge problem as David Roberts noted in Grist :
Those direct subsidies are a) a growing problem for the budgets of those countries, and b) a fraught and delicate political issue.
Worse, this could be an underestimate as they could total 3.5 trillion USD. Indeed, not taxing carbon emissions can be seen as an indirect subsidy. This is why the IMF is now calling for a carbon tax. (This will make you understand why I have writing a lot about it lately).
No wonder if the International Energy Agency’s (IEA) chief economist has today again urged governments around the world to end the $0.5tr of annual subsidies given to oil and gas production and has called ‘Fossil fuel subsidies (the) public enemy number one for green energy’
This madness has to stop as soon as possible.
Lucky us, the IMF is proposing solutions. As GreenTech Media reports :
To move away for energy subsidies, the IMF makes six recommendations, all easier said than done:
- A comprehensive reform plan
- A far-reaching communications strategy, aided by improvements in transparency;
- Appropriately phased energy price increases, which can be sequenced differently across energy products;
- Improving the efficiency of state-owned enterprises to reduce producer subsidies;
- Targeted mitigating measures to protect the poor; and
- Depoliticizing energy pricing to avoid the recurrence of subsidies.
Let’s hope the governements around the world will heed the call and both stop subsidizing oil, coal and natural gas and tax carbon. The future of our civilization depends on both moves. No less.
For more on this IMF report, please refer to these various articles :