LONODN (Financial Times) - Global fossil fuel subsidies hit a record total of $7tn in 2022 as governments rushed to shield consumers from soaring energy prices sparked by Russia, Ukraine crisis, the IMF estimates. The IMF study said subsidies for coal, oil and natural gas in 2022 were equivalent to 7.1 per cent of global gross domestic product. This represented more than governments spent on education, and two-thirds of what was spent on healthcare.
The elevated figure produced by the IMF includes so-called implicit subsidies, which are the result of governments undercharging for the environmental costs incurred by burning fossil fuels. These costs include air pollution and global warming, the IMF said.
The bulk of the global subsidies accounted for in the study fall into this category, the authors said, with the value forecast expected to grow as developing countries increase their consumption of fossil fuels.
The report from the IMF comes as the world experiences the hottest average monthly global temperatures ever recorded. The rise in global temperatures of at least 1.1C during the industrial era is caused predominantly by the burning of fossil fuels, scientists have concluded. “Explicit” subsidies — defined as consumers paying less than the supply costs of fossil fuels — have tripled since the previous IMF assessment in 2020, from $0.5tn to $1.5tn in 2022.
This compares with the most recent estimates from the International Institute for Sustainable Development think-tank this week that said subsidies from G20 economies stood at $1.4tn, including investments by state-owned enterprises and loans from public finance institutions.
An independent research report earlier this year put the figure at $1.8tn. However, the IMF report found that the increase in explicit subsidies was due to temporary support measures from governments and was expected to decline. East Asia and the Pacific region accounted for nearly half of the global total subsidy. China was the biggest subsidizer of fossil fuels, followed by the U.S., Russia, the European Union and India.