The continued maintenance of fossil fuel subsidies is a global scandal and governments should work to transform these subsidies into financing for energy efficiency and renewable energy, says World Wildlife Fund (WWF), responding to a report released yesterday by the International Monetary Fund (IMF).
The IMF report, Energy Subsidy Reform: Lessons and Implications, shines a much needed light on the dark side of fossil fuel subsidies.
The IMF assessment shows that global fossil fuel subsidies—including carbon pollution impacts from fossil fuels—account for almost nine percent of all annual country budgets, amounting to a staggering US$1.9 trillion, much higher than previously estimated. And importantly, says WWF Global Climate & Energy Initiative leader Samantha Smith, the report confirms that the poorest 20 percent of developing countries only marginally benefit from energy subsidies.
“Removing these subsidies would reduce carbon pollution by 13 percent. This would be a major step toward reducing the world’s carbon footprint. Maintenance of these subsidies is a global scandal, a crime against the environment and an active instrument against clean energy and technological innovation,” said Smith. “We strongly support transforming fossil fuel subsidies into an effective scheme for financing energy efficiency and renewables and making sure that the poor in developing countries benefit appropriately and receive clean, affordable and reliable energy.”
The IMF findings show that almost half of fossil fuel subsidies occur in OECD (Organisation for Economic Co-operation and Development) nations. The U.S., with about US$500 billion annually, accounts for more than one quarter of all global fossil fuel subsidies, followed by China with almost US$300 billion and Russia (US$115 billion).
WWF Global Energy Policy Director Stephan Singer says industrialized countries are responsible for the lion’s share of fossil fuel subsidies and should act now to stop them.
“If they were to abolish those subsidies and reform towards renewables and energy efficiency investments, it would more than triple present global investment into renewables,” said Singer. “And that is what is needed for a world powered by 100 percent sustainable renewables.”