Fossil fuels benefited from record subsidies of $13m (£10.3m) a minute in 2022, according to the International Monetary Fund, despite being the primary cause of the climate crisis.
The IMF analysis found the total subsidies for oil, gas and coal in 2022 were $7tn (£5.5tn). That is equivalent to 7% of global GDP and almost double what the world spends on education. Countries have pledged to phase out subsidies for years to ensure the price of fossil fuels reflects their true environmental costs, but have achieved little to date.
Explicit subsidies, which cut the price of fuels for consumers, doubled in 2022 as countries responded to the higher energy prices resulting from Russia’s war in Ukraine. Rich households benefited far more from these than poor ones, the IMF said. Implicit subsidies, which represent the “enormous” costs of the damage caused by fossil fuels through climate change and air pollution, made up 80% of the total.
Ending the subsidies should be the centrepiece of climate action, the IMF said, and would put the world on track to restrict global heating to below 2C, as well as preventing 1.6 million air pollution deaths a year and increasing government revenues by trillions of dollars. The researchers acknowledged that subsidy reform was politically difficult, but said carefully designed policies that supported poorer households could work, especially if coordinated internationally.
Scaling back subsidies would reduce air pollution, generate revenue, and make a major contribution to slowing climate change
Coal loader P4393. Part of the coal loading facility at Kooragang Island, NSW Australia. Image by eyeweed, Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0).
Fossil-fuel subsidies surged to a record $7 trillion last year as governments supported consumers and businesses during the global spike in energy prices caused by Russia’s invasion of Ukraine and the economic recovery from the pandemic.
As the world struggles to restrict global warming to 1.5 degrees Celsius and parts of Asia, Europe and the United States swelter in extreme heat, subsidies for oil, coal and natural gas are costing the equivalent of 7.1 percent of global gross domestic product. That’s more than governments spend annually on education (4.3 percent of global income) and about two thirds of what they spend on healthcare (10.9 percent).
Our findings come as the World Meteorological Organization says July was the hottest month on record, underscoring the urgent need to curb human-induced climate change.
As the Chart of the Week shows, fossil-fuel subsidies rose by $2 trillion over the past two years as explicit subsidies (undercharging for supply costs) more than doubled to $1.3 trillion. That’s according to our new paper, which provides updated estimates across 170 countries of explicit and implicit subsidies (undercharging for environmental costs and forgone consumption taxes). Download detailed data for different countries and fuels here.
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If governments removed explicit subsidies and imposed corrective taxes, fuel prices would increase. This would lead firms and households to consider environmental costs when making consumption and investment decisions. The result would be cutting global carbon-dioxide emissions significantly, cleaner air, less lung and heart disease, and more fiscal space for governments.
We estimate that scrapping explicit and implicit fossil-fuel subsidies would prevent 1.6 million premature deaths annually, raise government revenues by $4.4 trillion, and put emissions on track toward reaching global warming targets. It would also redistribute income as fuel subsidies benefit rich households more than poor ones.
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With global energy prices receding and emissions rising, it’s the right time to phase out explicit and implicit fossil-fuel subsidies, for a healthier and more sustainable planet.
12 months after her shambolic premiership commenced, we look at the lasting impact of our shortest-serving PM’s disastrous attempt to remould Britain into a low tax, deregulated economy.
Lettuce complains about being compared to Liz Truss.
Liz Truss. A political figure you are probably trying to forget, but a reminder that the short-term actions of politicians can have long-term outcomes. She was the prime minister who started her No 10. tenure on September 6, 2022, and oversaw a catastrophically unfunded, tax-cutting ‘mini’ budget, which cost the country a staggering £30bn. She then set about making a series of screeching U-turns and abandoned her entire policy programme, as she battled to settle the market meltdown and save her own skin.
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One year on after Truss took office and mortgage rates have hit a 15-year high, inflation remains uncomfortably high, and the growth the UK’s shortest-serving PM promised is nowhere to be seen, as millions fret about how they will afford their bills when winter comes.
After criticism that the Tory government was ‘rudderless’ in the face of soaring inflation, Liz Truss promised to make tackling the cost-of-living crisis her number one priority if she became PM. Recession is ‘not inevitable’ she had said as she pushed to stand out in the crowd of hopefuls during last summer’s Tory leadership campaign.
Instead of helping Britons tackle soaring living costs, Truss, together with her chancellor Kwasi Kwarteng, managed to do the exact opposite.
The sweeping tax cuts announced by Kwarteng triggered investor panic over the future health of the UK economy. The mini-budget (called ‘mini’ instead of just ‘budget’ to avoid scrutiny by the Office for Budget Responsibility) prompted a sharp fall in the value of the pound and drove up government borrowing costs.
Potential options for taxing wealth – based on Spain’s model – could raise significant funds for the public purse.
Image of loads of money
A new poll has revealed there is widespread support for ensuring the richest in society pay more in taxes in Britain. The survey was commissioned by the Trade Union Congress (TUC), ahead of its annual Congress, which starts in Liverpool this weekend.
The research found that over six in 10 people are calling for the wealthy to pay higher taxes, including over half (53 percent) of Tory voters in 2019. Three in four are also in favour of capital gains to be taxed at either the same rate or higher than income tax. This included 73 percent of Tory 2019 voters. Only 4% of the public think wealthy people should pay less tax, the survey found.
Paul Nowak, general secretary of the TUC, said it is time to “end the grotesque inequality of the Tories,” and that a national conversation about wealth tax needs to be had. The union body added that the Tories have allowed the wealthiest in Britain to “feather their nests” while working people have suffered the worst pay crisis for two centuries.
“The climate is already more disruptive than any activists can possibly be,” said a spokesperson for Extinction Rebellion.
A group of climate activists wearing shirts that read “End Fossil Fuels” delayed the semifinal match of the U.S. Open Tennis Championships by around 45 minutes Thursday night in an effort to call greater public attention to the planetary emergency that is wreaking deadly havoc worldwide.
One of the demonstrators glued his bare feet to the concrete in the stands at New York City’s Arthur Ashe Stadium, requiring additional effort by medical personnel and police to remove him and take him into custody.
The protesters were associated with the climate group Extinction Rebellion NYC, which said in a statement Thursday that there is “no tennis on a dead planet.”
“The climate and ecological crisis threatens everything on our planet, including sports,” the group said. “This action and similar actions are the response of a movement that has no other recourse than to engage in unconventional means of protest to bring mass attention to the greatest emergency of our time.”
Nineteen-year-old Coco Gauff won the semifinal match after it resumed. In an interview following her victory, Gauff said she supports “preaching about what you feel and what you believe in.”
“It was done in a peaceful way, so I can’t get too mad at it,” she said of the demonstration. “Obviously I don’t want it to happen when I’m winning up 6-4, 1-0, and I wanted the momentum to keep going. But hey, if that’s what they felt they needed to do to get their voices heard, I can’t really get upset at it.”
The U.S. Open—which counts JPMorgan, a major funder of fossil fuels, as an official partner—kicked off late last month amid growing concerns about the impact of extreme heat on the sport.
During a match earlier this week, Russian player Daniil Medvedev looked into a courtside camera between points and warned that an athlete is “gonna die” from the scorching temperatures.
Daniil Medvedev on the conditions in his match against Andrey Rublev:
The Associated Press reported that “it got so hot and humid at the U.S. Open on Tuesday that the folks in charge adopted a new policy for the rest of this year’s tournament: They will partially shut the Arthur Ashe Stadium roof in extreme conditions to offer some extra shade.”
“An Associated Press analysis showed the average high temperatures felt during the U.S. Open and the three other major tennis tournaments steadily have gotten higher and more dangerous in recent decades, reflecting the climate change that created record heat waves around the globe this summer,” the outlet noted. “For athletes, it can keep them from playing their best and, worse, increases the likelihood of heat-related illness.”
Earlier this week, the European Union’s Copernicus Climate Change Service confirmed that this summer has been the hottest on record, and a separate global report led by the U.S. National Oceanic and Atmospheric Administration showed that greenhouse gas concentrations hit a record high last year as fossil fuel extraction continued.
A recent survey found that experts on social movements believe disruptive protests of the kind launched by Extinction Rebellion are important to the success of a particular cause, even though the initial public reaction to such tactics can often be negative. The U.S. Open protest drew loud boos from attendees.
Miles Grant, an Extinction Rebellion spokesperson, said Thursday that “the climate is already more disruptive than any activists can possibly be.”
“Just look at the U.S. Open and other big tennis events—year after year, the average temperatures have been rising, making it hotter and more dangerous for the players and spectators,” said Grant. “At some point, there will be fewer outdoor sporting events due to excessive heat.”
