Fossil fuels subsidies are worth $5.3 trillion
$5.3 trillion (or 4.7 trillion euros) : those are staggering figures as they amount to $10 million every single minute. The figures come from the International Monetary Fund, so one can be pretty sure of them.
These figures are very large because they take into account the indirect subsidies like air pollution and climate change. As the Economist explained :
A new IMF working paper puts it at a stonking $5.3 trillion, or 6% of global GDP—more than all government spending on health care. The+ biggest subsidies are in the poorest countries (where they can reach 18% of GDP) and the lion’s share goes to coal, the dirtiest fuel, which no country taxes properly.
By contrast, renewable energy subsidies (mostly in the rich world and not covered in the IMF paper) amount to a mere $120 billion, and would vanish if fossil fuels were taxed fully.
The biggest subsidiser of fossil fuels is China at $2.3 trillion, followed by America ($700 billion), Russia ($335 billion), India ($277 billion) and Japan ($157 billion).
Big numbers bring big headlines. In this case, they also introduce much greater margins for error. The common and strict definition of subsidies is “pre-tax”: directly intervening to keep a price artificially low. On that basis, the cost of fuel subsidies is an order of magnitude lower, at $333 billion.
Moreover, it is down from $492 billion in 2011. The falling oil price has helped; some of the worst offenders such as India are now hacking away subsidies.
The IMF authors, however, use a broader “post-tax” definition, including tax exemptions (fuel is often untaxed) and wider costs such as pollution. Three-quarters of the damage pollution does, they say, is to the local environment (thereby hurting human health); the remainder is the cost of global warming (see chart).
For more on this research, please report to the IMF official website.