The International Monetary Fund estimates that the fossil fuel companies are subsidized by the equivalent of $10m a minute every day. The IMF calls the revelation “shocking” and says the figure is an “extremely robust” estimate of the true cost of fossil fuels. The $5.3tn subsidy estimated for 2015 is greater than the total health spending of all the world’s governments. No matter there is so much resistance to change for climate action--where is the incentive to change?
Nicholas Stern, an eminent climate economist at the London School of Economics, said: “This very important analysis shatters the myth that fossil fuels are cheap by showing just how huge their real costs are. There is no justification for these enormous subsidies for fossil fuels, which distort markets and damages economies, particularly in poorer countries.” And importantly, they 'crowd' out the innovations we need for more sustainable futures, keeping us mired in the old ways of doing business.
Lord Stern said that even the IMF’s vast subsidy figure was a significant underestimate: “A more complete estimate of the costs due to climate change would show the implicit subsidies for fossil fuels are much bigger even than this report suggests.”
Tune in to our virtual conversation today as Canadian scholars argue the desirability and feasibility of achieving a carbon neutral economy by 2015. Two important critical first steps are eliminating all subsidies to fossil fuel companies and putting a price on carbon.