The International Monetary Fund (IMF) has indicated that the leading Global Economic Powers collectively hold the Forefront in Worldwide fossil Fuel Subsidies.
Furthermore, it has been revealed that Global Fossil Fuel Subsidies reached a staggering $7 trillion in 2022, equivalent to approximately 7.1% of the Global Gross Domestic Product (GDP).
In its recently released report titled “IMF Fossil Fuel Subsidies Data: 2023 Update,” the IMF unveiled that explicit Subsidies (related to undercharging for supply expenses) account for 18% of the total, while Implicit Subsidies (linked to undercharging for environmental costs and forgone consumption taxes) make up 82%.
The Report highlights, “Explicit subsidies have more than doubled since the previous IMF assessment, Increasing from $0.5 trillion in 2020 to $1.3 trillion in 2022, Primarily due to elevated International Fossil Fuel Prices.
However, a significant portion of this increase stems from temporary Price Support measures, and Explicit Subsidies are expected to decrease if International Prices retreat from their peak levels.”
The report also notes that Implicit Subsidies are projected to rise due to the Expanding share of Fuel Consumption in Emerging Markets, where local Environmental Costs are generally higher.
Regarding Fuel pricing discrepancies, the Report underscores Substantial and pervasive variations between efficient Prices and retail prices, particularly in the case of Coal.
Approximately 80% of Global Coal Consumption in 2022 was priced at less than half of its Efficient level.
The report further Identifies that East Asia and the Pacific region account for nearly half of the Global Subsidy, and China remains the largest Subsidizer of Fuels in absolute terms, followed by the US, Russia, the EU, and India.
The report suggests that a Comprehensive reform of Fossil Fuel Prices, Involving the elimination of Explicit Fuel Subsidies and the Introduction of Corrective Taxes like a carbon tax, would lead to a 43% reduction in Global carbon dioxide (CO2) emissions below ‘business as usual’ levels by 2030.
Such reform would also result in averting about 1.6 million Premature Deaths annually due to local Air Pollution by 2030.
The report emphasizes that reforming Fossil Fuel Subsidies is not only aligned with Countries’ Interests but would also Contribute to achieving the Sustainable Development Goals.
