Trillions of Dollars are Pumped into our Fossil Fuel Addiction Every Year
Excerpts from the SkepticalScience piece posted April 2, 2013
A new report from the International Monetary Fund (IMF) estimates that overall global fossil fuel subsidies amount to about $1.9 trillion annually. As large as this number sounds, it's actually an underestimate for many reasons. The IMF report lists several of these reasons, including the fact that it's simply impossible to obtain data for all fossil fuel subsidies in all countries. However, the biggest contributor to the conservative dollar figure is related to the social cost of carbon.
The IMF report estimates that approximately one-quarter of all global fossil fuel subsidies ($480 billion) are direct pre-tax subsidies, with about half of that total coming from the Middle East and North Africa. Most of the rest comes from emerging and developing Asia (20%), and central and eastern Europe (15%). The bulk of these direct subsidies go to petroleum products ($212 billion, or 44%), electricity ($150 billion, 31%), and natural gas ($112 billion, 23%). Electricity subsidies are included because they increase the consumption of coal and natural gas.
Paying the Drug Dealer vs. Paying for Rehab
Pumping trillions of dollars of subsidies into the fossil fuel industry keeps the market price of their products low, but we can't avoid paying the price elsewhere. These subsidies keep us addicted to fossil fuels at the cost of public health and increasing climate change damage. Alternatively, we could spend this money in much more productive ways, including to transition away from fossil fuels toward low-carbon energy sources, solving the climate crisis in the process.
The transition won't be easy; we've become accustomed to low energy prices, artificially depressed by these massive fossil fuel subsidies. It's akin to going through rehabilitation for an addiction – it may be a somewhat painful process, but it's a necessary one, because the alternative is much worse. The alternative involves continuing to pump trillions of dollars towards our addiction until the inevitable climate crash finally comes.
WHAT RENEWABLE ENERGY COULDN'T DUE WITH $1.9 TRILLION ANNUALLY.