“The World Spends $400 Billion Propping Up Oil Companies. Fossil fuel subsidies in the United States also include massive military expenditures to acquire and defend fossil fuel interests around the globe, and infrastructure spending and related maintenance based on an antiquated energy system built on large, remote power plants and cheap electricity. In the case of indirect subsidies, establishing an amount as… David Coady, Ian Parry, Nghia-Piotr Le, and Baoping Shang (2019).

If fuel prices had been set at fully efficient levels in 2015, estimated global CO2emissions Pre-tax subsidies are the difference between the amount consumers pay and the opportunity cost of supplying that fuel (Coady, 2019). Internationally, governments actively ensure the availability and viability of fossil fuels by lowering the cost of fossil fuel energy production, gauging prices received by energy producers or paid by consumers. For more information about how we handle your data, please read our, Chapter on “Alternatives to Private Finance: Role of Fiscal Policy Reforms and Energy Taxation in Development of Renewable Energy Projects”, Measuring Fossil Fuel Subsidies in the Context of the Sustainable Development Goals (UNEP, IISD & OECD), UN Sec-Gen: don’t ‘throw away’ stimulus money on fossil fuels, India urged to lead global push for clean energy, climate action, TERI proposes a fiscally responsible Green Stimulus to revive growth and jobs, Copyright: MediaCompany GmbH, Bonn, Germany, 2020. The actual global cost to maintain the industry is $296 billion in 2017 (Coady, 2019). In 30 years, the Natural Resource Defense Council reported that taxpayers were short-changed at least $30 billion in order to keep corporation oil prices low (Spencer, 2017). The paper is available on the IMF website through this link.
This paper updates estimates of fossil fuel subsidies, defined as fuel consumption times the gap between existing and efficient prices (i.e., prices warranted by supply costs, environmental costs, and revenue considerations), for 191 countries. The actual global cost to maintain the industry is $296 billion in 2017 (Coady, 2019). David Coady, Ian Parry, Nghia-Piotr Le, and Baoping Shang (2019). In certain cases, quantifying these subsidies is fairly simple.

“Global Fossil Fuel Subsidies Remain Large: An Update Based on Country-Level Estimates.” International Monetary Fund. “Study: U.S. Fossil Fuel Subsidies Exceed Pentagon Spending” Rolling Stone.

The IMF report was primarily focused on price distortions, but producer subsidies are prevalent in the form of direct and indirect funding. More than 75 percent of U.S. MLPs are fossil fuel companies; these partnerships are not available to renewable energy groups. Below lists several, but not all, of the direct and indirect subsidies within the United States tax code compiled by the Environmental and Energy Study Institute in 2019: Intangible Drilling Cost Deduction – This provision in the tax code allows companies to deduct a majority of the cost of drilling new domestic wells. Master Limited Partnerships – This is a business structure that combines the investment opportunities of public corporations with the tax benefits of partnerships. As the climate change debate continues, fossil fuels are constantly scrutinized for the wear on the environment, and the governments are equally critiqued for making a pathway for these resources to be produced and available to consumers at a reasonable price. This number represents gasoline, diesel fuel, heating oil, jet fuel, and biofuel, products that are used in everyday life in the U.S. And taxpayers are paying for it; as stated above, more than $2,000 from an individual’s federal taxes will end up supporting the fossil fuel industry. Globally, subsidies remained large at $4.7 trillion (6.3 percent of global GDP) in 2015 and are projected at $5.2 trillion (6.5 percent of GDP) in 2017.
In 2016, one report by OCI estimated that taxpayers were responsible for $20.5 billion in subsidies for the energy sector. By fuel, coal remains the largest source of subsidies (44 percent), followed by petroleum (41 percent), natural gas (10 percent), and electricity output (4 percent). The IMF calls these two numbers the pre-tax ($296 billion) and post-tax ($5.2 trillion) fossil fuel subsidies. A new International Monetary Fund (IMF) study shows that USD$5.2 trillion was spent globally on fossil fuel subsidies in 2017. The IMF report was primarily focused on price distortions, but producer subsidies are prevalent in the form of direct and indirect funding. “The World Spends $400 Billion Propping Up Oil Companies. Other provisions in the tax code aimed at businesses in general create indirect subsidies that are not exclusive to the fossil fuels industry. International Association of Geophysical Contractors.” Importance of Fossil Fuels.”. Tim Dickinson (2019). © Copyright FossilFuel.com 2020, All Rights Reserved. Because these products are sold under fair market value to both individual consumers and companies, taxpayers end up fronting the bill in order to keep fossil fuel producers up and running. About three quarters of global subsidies are due to domestic factors—energy pricing reform thus remains largely in countries’ own national interest—while coal and petroleum together account for 85 percent of global subsidies. The IMF recently published a paper that updates estimates of fossil fuel subsidies, defined as fuel consumption times the gap between existing and efficient prices (i.e., prices warranted by supply costs, environmental costs, and revenue considerations), for 191 countries. Fossil fuels are just that: Products that fuel 96 percent of daily life by means of gasoline, natural gas, deodorant, clothes, dishwashers, etc (IAGC, 2019).

Efficient fossil fuel pricing in 2015 would have lowered global carbon emissions by 28 percent and fossil fuel air pollution deaths by 46 percent, and increased government revenue by 3.8 percent of GDP. The federal government provides numerous subsidies, both direct and indirect, to the fossil fuel industry.

Economy Division, Resources and Markets Branch, 11-13, Chemin des Anémones, 1219 Châtelaine, Geneva, Switzerland, 700 19th Street, N.W., Washington, D.C. 20431, USA, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), Friedrich-Ebert-Allee 36 + 40, 53113 Bonn, Germany, You hereby give your consent that we save your email address for the purpose of sending the newsletter. treatment, direct government budget transfers, or paying input prices below supply costs (Coady, 2019). The largest subsidizers in 2015 were China ($1.4 trillion), United States ($649 billion), Russia ($551 billion), European Union ($289 billion), and India ($209 billion).