Oil, coal and gas received $ 5.9 trillion in subsidies in 2020 – IMF report

Joe Manchin persists in spending $ 3.5 trillion over 10 years for Joe Biden’s Build Back Better plan. “We can’t afford it! he cries, cashing the check for $ 500,000 that he receives each year from the coal industry. But as he slaps his chest and proclaims his piety, he never objected to the $ 300 million a day the United States spent on its failed mission to punish Afghanistan for harboring Osama bin Laden. or the $ 2 trillion wasted on George W. Bush’s Iraqi getaway. . In sum, the United States has wasted $ 6.4 trillion in wars in the Middle East and Asia since 2001, according to CNBC.

The latest analysis from the International Monetary Fund (IMF) claims that the fossil fuel industry (of which Manchin is a part) received $ 5.9 trillion in direct and indirect subsidies in 2020. This is up from the $ 2 trillion. of dollars estimated by the IMF in 2014. Put that in your pipe and smoke it, King Coal Joe! This figure includes intangible assets such as tax breaks, healthcare costs associated with breathing in the pollutants they release into the atmosphere, and environmental damage such as more powerful storms, rising water levels. sea, drought, forest fires, etc.

These are all factors that have an economic cost but are not included in the price we pay for coal, oil, or non-natural gas. Economists refer to these costs as “untaxed externalities,” a fancy way of saying that fossil fuel companies profit financially from the fact that society does not hold them fully accountable for the damage caused when their products are consumed. It is a “face we win, face we lose” situation.

The IMF says explicit subsidies that reduce fuel prices were 8% of the total and tax breaks another 6%. The main factors have failed to make polluters pay for deaths and ill health caused by air pollution (42%) and for heat waves and other impacts of global warming (29%).

Under-pricing

According to Yale Environment 360, according to the IMF report, “Underpricing leads to overconsumption of fossil fuels, which accelerates global warming and exacerbates national environmental problems, including loss of life from local air pollution and traffic congestion. and excessive road accidents. This has long been recognized, but countries around the world are still a long way from having fair energy prices. “

The report finds that 47% of natural gas and 99% of coal is charged at less than half of its actual cost. Just five countries – China, the United States, Russia, India and Japan – account for two-thirds of global subsidies. The five countries belong to the G20, which agreed in 2009 to phase out “inefficient” fossil fuel subsidies “in the medium term”. Apparently, the “middle ground” is a time in the future when the Earth has warmed to the point where human habitation is almost impossible for the vast majority of people.

Setting the price of coal, oil and gas to reflect their true cost – a carbon tax is one way to do this precisely – would reduce carbon dioxide emissions by about a third and go a long way in limiting global warming at only 1.5 ° C. Such policies would create new revenues amounting to 3.8% of global GDP and prevent nearly one million deaths from local air pollution each year.

Appropriate pricing of fossil fuels would reduce emissions by encouraging power producers to switch from coal to renewables. This would make electric cars an even cheaper option for drivers than they are today.

But what about the poor?

Many people believe that any increase in the cost of fuel will have a disastrous effect on poor communities. This is not the case, explains the IMF report. “There would be huge benefits to reform, so there is a huge stake,” said Ian Parry, environmental policy expert and lead author of the report. The Guardian. “Some countries are reluctant to raise energy prices because they think it will hurt the poor. But keeping fossil fuel prices up is a very inefficient way to help the poor, as most of the benefits go to the richer households. It would be better to target resources to directly help the poor and vulnerable. In other words, cutting fuel costs is about helping loved ones in need by donating to Oxfam.

COP26

With the start of COP26 in Glasgow in a few weeks, this is a topical issue. “To stabilize global temperatures, we urgently need to move away from fossil fuels instead of adding fuel to the fire,” said Mike Coffin, senior analyst at Carbon Tracker. The Guardian. “It is essential that governments stop supporting a declining industry and instead seek to accelerate the low-carbon energy transition and our future. “

“The IMF report is sobering read, highlighting one of the main flaws in the global economy,” said Maria Pastukhova of environmental group E3G. “The IEA’s net zero roadmap predicts that $ 5,000 billion will be needed by 2030 to put the world on the path to a climate-safe world. It is infuriating to realize that much needed changes could begin now, if not for the entanglement of governments with the fossil fuel industry in so many major economies. We believe she’s speaking directly to you, Joe Manchin. “Fossil fuel subsidies have been a major stumbling block in the G20 process for years,” she said. “Now all eyes are on the G20 leaders’ summit at the end of October.”

Takeaway meals

International cooperation will be essential to allay fears that countries could lose competitiveness if their fossil fuel prices were higher, says Ian Parry. And that’s a problem. Clearly, countries will be reluctant to be the first to act if it hurts their economies and strengthens the financial fortunes of others. Building international cooperation at COP26 will be difficult, especially as many of the poorest countries are still waiting for the financial aid to convert to low-carbon technologies that was pledged by rich countries in 2015.

The world community needs to understand that the fossil fuel economy is based on a lie – a lie that says there is no economic cost to burning coal, oil and gas. In fact, the costs are enormous. How much is Earth’s security worth for humans to live on? This is the question King Coal Joe and his ilk must be asking themselves.

Featured Image: Fossil Fuel Divestment Logo via 350.org

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