logo

10 August 2017

Worldwide Fossil Fuel Subsidies Add To An Astonishing $5.3 Trillion

Fossil fuel subsidies made for an eyebrow-raising 6.5 percent of the global GDP in 2015, or about $5.3 trillion.

This revelation on behalf of the International Monetary Fund was reported by four economists, and published earlier this year in the World Development journal.

The study took a broad approach, factoring how subsidies arise when consumer prices are below supply costs, along with consumption taxes and the environmental costs.

Also examined in the study was estimated total cost of the subsidies and the economic and environmental benefits that would come from reforming them.

Subsidy costs for 2013 included 22 percent for global warming, 46 percent for air pollution, 13 percent for “broader vehicle externalities,” 11 percent for supply costs, and 8 percent for general consumer taxes.

China had provided the largest share of subsidies in 2013, at $1.8 trillion, followed by the U.S. ($0.6 trillion), and then by Russia, the European Union, and India — each at about $0.3 trillion.

Breaking out the subsidies by end use, the authors found coal made for about half of global subsidies. Petroleum is also a large recipient of the subsidies, followed by natural gas, and electricity.

The economists see the broader view being more accurate in gauging its real impact. It reflects “the gap between consumer prices and economically efficient prices.”

SEE ALSO: Energy Outlook Sees Fossil Fuels To Dominate But At Reduced Rate In 2035

They also see fossil fuel subsidies being costly by discouraging in energy efficiency and renewable energy, as they directly compete with subsidized fossil fuels. .

The study’s authors hoped to present a broad, inclusive approach to measuring the overall impact of fossil fuels and changes in corporate and government policies that should be considered.

“By estimating these costs on a global scale, we hope to stimulate an informed policy debate and provide renewed impetus for policy reforms to reap the large potential benefits from more efficient pricing of fossil fuels in terms of improved public finances, improved population health and lower carbon emissions,” Dr. Coady, one of the authors, told The Guardian.

The Guardian

Please follow and like us:

Share
#

Write a comment

5+7 = ?