Those $7 trillion fossil fuel subsidies as per the IMF
Fossil fuels benefited from record subsidies of $13m (£10.3m) a minute in 2022, according to the International Monetary Fund, despite being the primary cause of the climate crisis.
The IMF analysis found the total subsidies for oil, gas and coal in 2022 were $7tn (£5.5tn). That is equivalent to 7% of global GDP and almost double what the world spends on education.
So, what should we in Britain do about this? Well, first, perhaps see how much we in Britain are contributing to the problem. The numbers are available as a spreadsheet here. We’ll not claim to have been exhaustive in our reading but we think that the IMF is claiming a £1.7 billion direct subsidy to fossil fuels in the UK. Which is a triviality. Either in the context of the global numbers the IMF is presenting us with or in the context of the UK economy.
It’s the indirect numbers that actually make up by far the bulk here. And the IMF calculates those by insisting that fossil fuel use should cover all externalities of its use plus whatever the VAT rate is on top. Anything less than that is a subsidy.
Well, if we take that straight then of course subsidies to renewables are vastly larger than normally claimed. The lower domestic energy VAT rate applies there, no?
But we can also look at the detail of their claim that the UK has indirect subsidies on petrol and diesel. Page 14 here. They are counting £tens of billions of fossil fuel subsidies there. But close examination shows that to be unwarranted. In fact, we’d say wrong. Because the effects specific to fossil fuels - pollution etc - are entirely and fully covered. The parts that aren’t are congestion and road damage. But if we all switched to EVs tomorrow then those two would be the same - higher in fact, given greater car weights. So that externality is not a subsidy to fossil fuels but to autonomous transport. Really shouldn't be included here at all.
Actual close examination shows that we in Britain don’t subsidise fossil fuels above anything but the level of utmost triviality. Which is presumably why the Guardian didn’t give us the national numbers, only the global.