Fossil fuel subsidies hit $1.3 trillion despite government pledges to end them
The report by the International Monetary Fund (IMF) looked at both explicit and implicit subsidies for fossil fuels across 170 countries. It found explicit subsidies alone have more than doubled since the previous IMF assessment, rising from $500 billion in 2020 to $1.3 trillion in 2022 as governments rushed to mitigate the inflationary impact of Russia’s invasion of Ukraine and the spike in demand caused by the economic recovery from Covid-19.
Those subsidies are direct monetary support for fossil fuels through activities like regulated prices set below international levels and energy bill rebates.
IMF also calculates implicit fossil fuel subsidies, which include the cost of things such as undercharging for environmental costs and failing to levy taxes on consumption. Adding those in and the total subsidies ballooned to $7 trillion in 2022.
That’s an increase of $2 trillion compared to 2020.
The findings dovetail with a report that came out earlier in the week by the International Institute for Sustainable Development (IISD), a Canada-based think tank, which found that public monies in G-20 countries alone going to explicit fossil fuel subsidies more than quadrupled to $1 trillion in 2022 compared to a year ago.
The two reports put into stark relief the chasm between nations’ stated goals on the urgency of cutting back on fossil fuels and their actions. In 2015, the world’s nations signed onto 17 United Nations’ Sustainable Development Goals, which included a commitment to phase out fossil fuel subsidies.
