Record-breaking Fossil Fuel Subsidies Reach $7 Trillion, IMF Reports

Fossil fuels received a record $13 million per minute in subsidies in 2022, totaling $7 trillion, according to the International Monetary Fund (IMF). These subsidies, equivalent to 7% of global GDP, hinder efforts to combat the climate crisis. Explicit subsidies, which lower fuel prices for consumers, doubled in 2022 due to higher energy prices resulting from the conflict in Ukraine. Implicit subsidies, representing the costs of climate change and air pollution, accounted for 80% of the total. The IMF argues that ending these subsidies should be a priority in climate action, as it would help limit global warming, prevent air pollution deaths, and increase government revenues. However, subsidy reform is politically challenging, and coordinated international efforts are needed. The G20 nations, responsible for 80% of global carbon emissions, pledged to phase out inefficient fossil fuel subsidies in 2009 but poured a record $1.4 trillion into them in 2022. Ending subsidies would reduce emissions by 34% by 2030, a significant step towards the necessary 43% reduction to limit global heating to 1.5C.