International Monetary Fund (IMF) recently published a working paper titled How Large Are Global Energy Subsidies? (You can access the full report here). The highlight of the report has been the revelation that fossil fuels are subsidised by$10m a minute!!
Fossil fuel companies are getting an annual subsidy of $5.3tn.
The IMF calls its “Shocking” and the numbers “Extremely” robust estimate of the cost of fossil fuel subsidies. “This very important analysis shatters the myth that fossil fuels are cheap by showing just how huge their real costs are. There is no justification for these enormous subsidies for fossil fuels, which distort markets and damages economies, particularly in poorer countries” says Nicholas Stern from LSE.
The final figure is a total sum of all life cycle expense of the fossil fuel including the energy cess imposed on fossil fuel companies which in most cases is an automatic default by the companies.
The report further says removing these subsidies will result in carbon reduction by 20% which will be a big fillip to the Global Warming cause.
The top countries
China continues to be the no 1 in terms of fossil fuel subsidy followed the US,Russia and India.
What about renewable energy?
The report also notes that renewable energy are currently believed to be subsidised $120b a year. Experts say, these so called subsidies for renewable energy can be waived off if we stop subsidising the fossil fuels.
The report is one more affirmation that climate change mitigation is possible and we must act now. “Act Local, save global” is the theme going into the climate change negotiations in Paris, December 2015.