the international community is ‘just scratching the surface’ and still has a long way to go. According to the international financial institution, a total of $5.9 trillion in subsidies was awarded for the production and burning of oil and gas and coal in 2020, which means the fossil fuel industry benefitted $11 million every minute as incentives.
At a time when there is a growing need minimise greenhouse gas emissions, experts note that these subsidies were “adding fuel to the fire” of the climate crisis, as fuel prices continue to fail to accurately reflect their environmental costs. Currently, the international community is racing against the clock to limit global warming at 1.5°C and this is the key goal of the upcoming UN climate summit (COP26) in November. According to IMF analysts, imposing fossil fuel prices which reflect their true environmental costs would slash global greenhouse gas emissions by over a third.
“Fossil fuel price reform could not be timelier,” the researchers said, adding that such measures would generate “enormous benefits”.
“Some countries are reluctant to raise energy prices because they think it will harm the poor. But holding down fossil fuel prices is a highly inefficient way to help the poor, because most of the benefits accrue to wealthier households. It would be better to target resources towards helping poor and vulnerable people directly,” Ian Parry, the lead author of the report, noted.
Sharing his views regarding the findings, Mike Coffin, a senior analyst at Carbon Tracker, pointed out that in order to stabilise global temperatures we must urgently move away from fossil fuels. “It’s critical that governments stop propping up an industry that is in decline, and look to accelerate the low-carbon energy transition, and our future, instead,” he added.
