The world depends on fossil fuels right now, there’s no denying that. While sustainable and renewable alternatives are making headway, fossil fuels remain the world’s primary source for energy, plastics, and heating fuel, among other things.
According to the International Monetary Fund governments around the world are spending northwards of $5 trillion dollars to subsidize fossil fuels. To put this into perspective, spending amounts to more than $10 million dollars per minute. The spending also outpaces all government spending world-wide on health care.
The biggest costs come from government efforts to clean up and mitigate pollution, including green house gases. Essentially, while the benefits of extracting and engaging in economic activities related to fossil fuels is privatized and for profit, the costs of said activities are socialized.
As Nicholas Stern, a leading climate economist at the London School of Economics, points out “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.”
According to the IMF, subsidies are distorting markets. As the detrimental costs of fossil fuels are socialized, for-profit companies are encouraged to engage in fossil-fuel based economic activities.
Similar arguments have been made before, but what makes this one especially important is that it’s coming from the IMF, a pro-free market and trade organization. The IMF argues that cutting subsidies to fossil fuels would cut carbon emissions by 20 percent.
The IMF argues that increasing floods, droughts, and other mega-events that are tied to global warming are costing the global economy trillions of dollars.
Within this context, the IMF argues that it’s estimates may be conservative, if anything. The full scope of the costs and affects on the global economy and environment could be much greater.
Ending fossil fuel subsidies should end the pressing need for subsidies for renewable energies, which currently weighs in at $120 billion per year. Once fossil fuel subsidies are ended, alternative sustainable energies would be more economically competitive.
The IMF also points to air pollution as a major drag on heath, the environment, and the economy. Ending fossil fuels would reduce outdoor air pollution substantially. This could lead to a 50 percent reduction in the number of premature deaths caused by said pollution.
Currently, as many as 1.6 million people are dying due to outdoor air pollution.
