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Fossil fuel industry gets subsidies of $11m a minute, IMF finds | Fossil fuels

The fossil fuel industry benefits from subsidies of $11m every minute, according to analysis by the International Monetary Fund.

The IMF found the production and burning of coal, oil and gas was subsidised by $5.9tn in 2020, with not a single country pricing all its fuels sufficiently to reflect their full supply and environmental costs. Experts said the subsidies were “adding fuel to the fire” of the climate crisis, at a time when rapid reductions in carbon emissions were urgently needed.

Explicit subsidies that cut fuel prices accounted for 8% of the total and tax breaks another 6%. The biggest factors were failing to make polluters pay for the deaths and poor health caused by air pollution (42%) and for the heatwaves and other impacts of global heating (29%).

Setting fossil fuel prices that reflect their true cost would cut global CO2 emissions by over a third, the IMF analysts said. This would be a big step towards meeting the internationally agreed 1.5C target. Keeping this target within reach is a key goal of the UN Cop26 climate summit in November.

Agreeing rules for carbon markets, which enable the proper pricing of pollution, is another Cop26 goal. “Fossil fuel price reform could not be timelier,” the IMF researchers said. The ending of fossil fuel subsidies would also prevent nearly a million deaths a year from dirty air and raise trillions of dollars for governments, they said.

Fossil fuels benefitted from subsidies of $5.9 trillion in 2020

“There would be enormous benefits from reform, so there’s an enormous amount at stake,” said Ian Parry, the lead author of the IMF report. “Some countries are reluctant to raise energy prices because they think it will harm the poor. But holding down fossil fuel prices is a highly inefficient way to help the poor, because most of the benefits accrue to wealthier households. It would be better to target resources towards helping poor and vulnerable people directly.”

With 50 countries committed to net zero emissions by mid-century and more than 60 carbon pricing schemes around the world, there are some encouraging signs, Parry said: “But we’re still just scratching the surface really, and there’s an awful long way to go.”

The G20 agreed in 2009 to phase out “inefficient” fossil fuel subsidies and in 2016, the G7 set a deadline of 2025, but little progress has been made. In July, a report showed that the G20 countries had subsidised fossil fuels by trillions of dollars since 2015, the year the Paris climate deal was reached.

“To stabilise global temperatures we must urgently move away from fossil fuels instead of adding fuel to the fire,” said Mike Coffin, senior analyst at the thinktank Carbon Tracker. “It’s critical that governments stop propping up an industry that is in decline, and look to accelerate the low-carbon energy transition, and our future, instead.

“As host of Cop26, the UK government could play an important global leadership role by ending all subsidies…

Read More: Fossil fuel industry gets subsidies of $11m a minute, IMF finds | Fossil fuels

2021-10-06 01:00:00

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