New figures reveal widespread support for oil, gas and coal sector, highlighting climate and health risks linked to pollution
By Ed King
Fossil fuel subsidies in China, Qatar and Ukraine are some of the highest in the world according to new data from the International Monetary Fund (IMF).
China spends $2,271 billion a year backing the oil, gas and coal sector, the largest supporter in dollar terms on the planet, followed by the US with $700m and Russia on $335m.
Ukraine spends 61% of its GDP on subsidies – 49% on coal and 8% on gas, while tiny gas giant Qatar tops the per capita index, spending nearly $6,000 a head each year in support of fossil fuels.
Support among the world’s G20 is worth $1,000 per person a year, despite repeated pledges by the group of the world’s top economies since 2009 to phase out fossil fuel subsidies.
The data shows the UK spends $41 billion a year on subsidies, Japan $157bn, Korea £72bn and Germany $55bn. The hosts of this year’s UN climate conference – France – spend $30bn.
Speaking to the Guardian, climate change economist Lord Stern said the bloc should “honour their commitment” and admit spending on fossil fuels was “far greater than previously understood”.
Green groups, UN officials and the World Bank have long called for governments to get a grip on subsidies, which are blamed for boosting fossil fuel-linked carbon emissions by 20%.
Further calls for action may come in December, when 195 countries meet in Paris to finalise plans for a deal to slash emissions.
A new version of the negotiating text offers an option for countries to agree on a collective goal to reduce, eliminate or phase down subsidies, a proposal backed by the IMF.
“Energy subsidy reform can also contribute to carbon emissions reduction and help countries make pledges ahead of the Paris 2015 UN climate conference,” it said.
“To achieve significant carbon emissions cuts at the global level, it would be essential for top subsidizers in dollar terms to play a leading role.”
An earlier version of the IMF study revealed global subsidies for fossil fuels were likely to hit $5.3 trillion in 2015, nearly 6.5% of the world’s GDP.
The new figures offer a country-by-country breakdown of the level of support offered to the sector, including tax breaks, financial assistance and price cuts.
In a controversial move, the IMF has included the costs fossil fuel use imposes on the environment and human health, radically boosting a figure that was $2 billion in 2013.
“The bulk of energy subsidies in most countries are due to undercharging for domestic environmental damage,” write officials in a blog accompanying the data release.
These externalities include local air pollution from coal fired power plants, traffic congestion and accidents linked to car use.
Many governments – including the UK – do not recognise these latest calculations, maintaining they do not offer high levels of support for the fossil fuel sector.
Still, according to the IMF, eliminating the subsidies could stop 1.6 million premature deaths a year and lead to a revenue gain of $2.9 trillion.
“In emerging economies, the revenue is worth double their corporate income tax revenues or public health spending.
“In low-income countries, it is about one and half times corporate income tax revenues or public health spending.”