The fossil fuel industry rakes in $11 million in subsidies every single minute, according to analysis by the International Monetary Fund.
The IMF revealed the production and burning of coal, oil and gas was subsidised by $5.9 trillion in 2020 – with not a single country pricing its fuels sufficiently to reflect their complete supply and environmental costs.
Experts said the astonishing subsidies were “adding fuel to the fire” of the climate emergency ahead of COP26, with a drastic reduction in carbon emissions urgently needed.
Subsidies that directly cut fuel prices comprised 8 per cent of the total, and tax cuts another six per cent. The biggest money-saver was the failure to make polluters pay for the deaths and ill health caused by air pollution and for the impacts of global heating.
‘Enormous amount at stake’
Setting fossil fuel prices that reflect their true cost to global society would cut CO2 emissions by over a third, IMF researchers said. That would mark a big step towards meeting the 1.5C target agreed in Paris in 2015.
Ending fossil fuel subsidies could prevent close to a million deaths a year from dirty air – and raise trillions of dollars for governments, the IMF added.
“There would be enormous benefits from reform, so there’s an enormous amount at stake,” said Ian Parry, the report’s lead author.
“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.”
Properly pricing fossil fuels would cut emissions by encouraging electricity generators to switch to renewable energy and making electric cars a cheaper option for motorists.
Maria Pastukhova, from the think-tank e3g, told the Guardian: “The IMF report is a sobering reading, pointing to one of the major defects of the global economy.
“The IEA’s net-zero roadmap projects that $5tn is necessary by 2030 to put the world on the pathway to a climate-safe world.
“It is maddening to realise the much-needed change could start happening now, if not for governments’ entanglement with the fossil fuels industry in so many major economies.”
The warnings come as climate change have used an oil rig prop to block the entrance to an oil rig maintenance facility on the Cromarty Firth.
Extinction Rebellion Scotland members began their protest at the facility at the Invergordon Service Base of the Cromarty Firth Port Authority at 6.50am on Wednesday.
They placed a 13ft 8in (4.2m) oil rig made from scrap materials with a banner saying “Decommission Me Now” on the road, and four people locked themselves on to prop oil barrels on the route to block traffic.
Activists also unfurled a banner stating “Climate Emergency” across the road, while some held signs saying “No Future in Fossil Fuels”.
The group are calling for an end to fossil fuel extraction and want to see support for a transition of skilled oil and gas workers into decommissioning and renewable industries, not new oil fields.
John Lardner, 69, Extinction Rebellion (XR) Scotland activist and retired history teacher, said “The Chatham House report says that even if the Paris Agreement carbon emissions were achieved, we have almost no chance of staying below pre-industrial levels of warming. We have to act now.
“Our carbon budget is empty. We have no option.”