Fossil Fuel Subsidies Make Up Almost 7 Percent Of Global Economy


Robin Andrews

Science & Policy Writer

clockAug 8 2017, 16:22 UTC

Coal receives around half of these subsidies. worradirek/Shutterstock

Renewable energy is on the up and up all over the world. Thanks to market forces and resurgent climate advocacy at both a government and grassroots level, it looks almost certain that they will be the power source of the near, or distant, future.


Fossil fuels aren’t going quietly into that good night, however. The vested interests behind them are still being supported by two key things: lobbied lawmakers that have become bellicose cheerleaders for coal, and governments that help to lower the cost of generating fossil fuel energy through subsidies.

The numbers behind these economic handshakes are staggering. A recent study published in the journal World Development reveals that these subsidies amount to $5 trillion per year, which is roughly 6.5 percent of the total worth of the global economy.

This value matches up with a 2015 International Monetary Fund (IMF) report, which concluded that the global cost of fossil fuel subsidies was $14.5 billion per day, or $10 million per minute. The authors of this paper – also the IMF – have noted that these subsidies outspend the total health expenditure for every single government in the world combined.

Around half of these subsidies are going towards coal, which is arguably the most threatened of all the fossil fuels.


The researchers explain that “in absolute terms, subsidies are highly concentrated in a few large countries. China was the biggest subsidizer in 2013 ($1.8 trillion), followed by the United States ($0.6 trillion), and Russia, the European Union, and India (each with about $0.3 trillion).”

You're paying for this. Anastasiia Tymoshenko/Shutterstock

Remember, government fossil fuel subsidies are funded by the taxpayer – that’s you. So, whether you like it or not, you are paying for the government to help the fossil fuel industry contribute towards climate change, air pollution, and river pollution, particularly if you live in those three countries.

As aforementioned, this money is a way to make mining and burning fossil fuels cheaper. However, the paper’s authors note that this money is also paying for the related damage to the environment, the economy, and the public as a whole too.


Seeing as the impacts of fossil fuels are only getting more severe, this suggests that these subsidies are only going to get more costly over time – unless, of course, the government follows the lead of several major businesses and cuts these subsidies entirely as soon as possible.

The benefits are as clear as day. The IMF estimate that cutting them back in 2013 would have cut global carbon emissions by over a fifth and fossil fuel air pollution deaths by 55 percent, while boosting the global GDP by 4 percent in terms of pure revenue.

If governments want cleaner air and water, cheaper electricity, and a less scorched planet for their grandchildren to inherit, they should be subsidizing renewable energy sources instead.


A recent analysis shows that a rather modest expansion of solar farms and onshore wind turbines by 2050 would result in around $12.5 trillion being saved, compared to sticking with fossil fuels. Forget the billions of tonnes of greenhouse gas emissions they’d prevent from escaping to the atmosphere for a minute, the economic argument is compelling all by itself.

Right now, governments are mostly placing their bets on the wrong hand. It’s in everyone’s best interests to convince lawmakers to switch up and free themselves from the disproportionate control that the fossil fuel industry has on them.

The future is windy. chaiviewfinder/Shutterstock

[H/T: Guardian]

  • climate change,

  • global warming,

  • funding,

  • China,

  • Russia,

  • USA,

  • air pollution,

  • economics,

  • GDP,

  • subsidies,

  • global economy,

  • 6.5%,

  • $5 trillion