A September 2021 working paper by the International Monetary Fund found that globally the fossil fuel industry receives subsidies of $11 million per minute, as reported on by The Guardian and Treehugger in October 2021. In 2020, governments subsidized the fossil fuel industry to the tune of $5.9 trillion, or 6.8 percent of global GDP, with this number projected to rise to $6.4 trillion, or 7.4 percent of global GDP, by 2025. Explicit subsidies account for 8 percent of this figure, while implicit subsidies, including not charging for damages caused by air pollution (42 percent), global warming (29 percent), costs borne from local externalities such as traffic collisions and congestion (15 percent), and forgoing tax revenue (6 percent), contribute the vast majority at 92 percent. Fossil fuel companies do not have to pay for the damages their product causes, making fossil fuels artificially cheaper and leaving taxpayers to cover the environmental costs.
Pricing fossil fuels to cover both their supply and environmental costs—in other words, not subsidizing the industry—would mean that fossil fuels are priced at what the IMF paper called their efficient price. In fact, currently no government prices all fossil fuels at their “efficient” price such that the price is high enough to cover both the fuel’s supply and environmental costs. An estimated 99 percent of coal, 52 percent of road diesel, 47 percent of natural gas, and 18 percent of gasoline are priced at less than half of their efficient prices.
These subsidies are not evenly distributed across the globe. Just five countries, the United States, Russia, India, China, and Japan, are responsible for two-thirds of global fossil fuel subsidies. In the United States continued subsidies increase the profitability of new oil and gas wells by more than fifty percent, with nearly all of the subsidy going to excess profits. Were the US Congress to stop providing tax breaks to the fossil fuel industry, the drilling of new oil wells would decrease by about 25 percent, Treehugger reported.
The IMF paper that spurred this independent reporting explains that ”underpricing of fossil fuels is still pervasive across countries and is often substantial.” If underpricing were to cease by 2025, deaths attributable to fossil fuel air pollution would drop by 32 percent, saving about a million lives per year, and carbon dioxide emissions would decrease 36 percent, which would cause global warming to remain under 1.5 degrees Celsius. Moreover, the globe would experience net economic benefits of 2.1 percent of global GDP.
As of mid-April 2022, no corporate news outlets have reported on this story, though a few industry publications such as Power Technology have covered it.
Sources:
Damian Carrington, “Fossil Fuel Industry Gets Subsidies of $11M a Minute, IMF Finds,” The Guardian, October 15, 2021.
Eduardo Garcia, “Fossil Fuel Companies Receive $11 Million a Minute in Subsidies, New Report Reveals,” TreeHugger, October 21, 2021.
Student Researcher: Annie Koruga (Ohlone College)
Faculty Advisor: Robin Takahashi (Ohlone College)
The post Fossil Fuel Industry Subsidized at Rate of $11 Million Per Minute appeared first on Project Censored.
This content originally appeared on Project Censored and was authored by Vins.
Vins | Radio Free (2022-04-11T23:03:57+00:00) Fossil Fuel Industry Subsidized at Rate of $11 Million Per Minute. Retrieved from https://www.radiofree.org/2022/04/11/fossil-fuel-industry-subsidized-at-rate-of-11-million-per-minute/
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