Fossil fuels benefitted from a record subsidy rate of $13 million per minute in 2022, according to the International Monetary Fund (IMF).
Total subsidies for oil, gas and coal topped out at $7 trillion in 2022, which equates to 7% of the world’s GDP and almost twice as much as what was spent on education globally, according to The Guardian.
The IMF found that petrol and other oil products accounted for 50% of explicit subsidies in 2022. Coal came in at 30% while fossil gas hit 20%. Coal was heavily subsidized in 2022 because 80% of the world’s coal was sold at a price that was less than half of the commodity’s true cost.
China, the U.S., Russia, the EU and India were some of the biggest fossil fuel subsidizers in 2022.
The IMF also found that ending fossil fuel subsidies could cut global emissions outputs by 34% by 2030 when compared to levels seen in 2019.
Ian Parry, the principal Environmental Fiscal Policy expert for the IMF, said that cutting fossil fuel subsidies needs to be at the center of ESG efforts over the next few years if the planet wants to limit global warming and prevent 1.6 million air pollution deaths annually. He said that this can be done through carbon pricing and using revenues from reforms to compensate for “poor and vulnerable households.”
“We are in this situation because it can be very difficult to increase taxes on fossil fuels, not least when countries are acting unilaterally,” Parry said. “We recommend that large emitting countries coordinate on carbon pricing or similar policies to help scale up global action.”
