Fossil Subsidies Hit a ‘Staggering’ $5.7 Trillion in 2017
Global fossil fuel subsidies were expected to total US$5.7 trillion in 2017, and U.S. subsidies in 2015 exceeded the country’s profligate military spending, according to analysis released earlier this month by the International Monetary Fund.
In a summary of its May 2 working paper, the IMF places 2015 subsidies across 191 countries at $4.7 trillion, or 6.3% of GDP, including $1.4 trillion from China, $694 billion from the U.S., $551 billion from Russia, $289 billion from the European Union, and $209 billion from India.
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“The numbers are quite staggering,” said IMF Managing Director Christine Lagarde, “fiscally, but also in terms of human life, if there had been the right price on carbon emission as of 2015.” The IMF’s working paper summary states that “efficient fossil fuel pricing in 2015 would have lowered global carbon emissions by 28% and fossil fuel air pollution deaths by 46%, and increased government revenue by 3.8% of GDP.”
With subsidies brought under control, Lagarde added, “there would be more public spending available to build hospitals, to build roads, to build schools, and to support education and health for the people.” The summary notes that “about three-quarters of global subsidies are due to domestic factors—energy pricing reform thus remains largely in countries’ own national interest—while coal and petroleum together account for 85% of global subsidies.”
Rolling Stone compares U.S. subsidies to the $599 billion budget the country’s bloated military received in 2015. “To offer a sense of scale, Pentagon spending accounted for 54% of the discretionary [U.S.] federal budget in 2015,” the magazine writes. “In comparison to another important, but less well-funded part of the federal budget, fossil fuel subsidies were nearly 10 times what Congress spent on education. Broken down to an individual level, fossil fuel subsidies cost every man, woman, and child in the United States $2,028 that year.”
The fossil industry and its “stooges in public office” routinely argue “that making consumers pay for the full impacts of fossil fuel use would cripple the economy,” Rolling Stone adds. “The IMF experts call bullshit on this idea, revealing that the world would, in fact, be more prosperous. Eliminating subsidies for fossil fuels would have created global ‘net economic welfare gains’ in 2015 of ‘more than $1.3 trillion, or 1.7% of global GDP,’ the study found,” with the calculation based on reduced environmental damage and higher government revenues after factoring in consumer losses due to higher energy prices.