The fossil fuel industry receives $5.3 trillion a year in government subsidies, despite its disastrous toll on the environment, human health, and other global inequality issues, a new report by the International Monetary Fund (IMF) published Monday has found.
That means that governments worldwide are spending $10 million every minute to fund energy companies—more than the estimated public health spending for the entire globe, IMF economists Benedict Clements and Vitor Gaspar wrote in a blog post accompanying the report (pdf).
“These estimates are shocking,” Clements and Gaspar wrote. “The number for 2015 is more than double the US$2 trillion we had previously estimated for 2011.”
Subsidies occur in two ways, IMF Fiscal Affairs Department directors Sanjeev Gupta and Michael Keen explained in a separate blog post published Monday:
“[P]re-tax” subsidies—which occur when people and businesses pay less than it costs to supply the energy—are smaller than a few years back. But “post-tax” subsidies—which add to pre-tax subsidies an amount that reflects the environmental, health and other damage that energy use causes and the benefit from favorable VAT or sales tax treatment—remain extremely high, and indeed are now well above our previous estimates.
The damages from energy use include “premature deaths through local air pollution, exacerbating congestion and other adverse side effects of vehicle use, and increasing atmospheric greenhouse gas concentrations,” the report states.
“Energy subsidies are both large and widespread. They are pervasive across advanced and developing countries,” Clements and Gaspar write. The worst offenders are China, which gave a $2.3 trillion subsidy to its domestic fossil fuel industry, and the U.S., which spent $699 billion.