How Fossil Fuel Subsidies Fuel Climate Change

Credit, Guardian

In 2017, Fossil fuel gulped five point two trillion dollars in subsidies, an amount equal to roughly six point five percent of global GDP and half a trillion dollars from the total of 2015, when subsidies came to four point seven trillion dollars.

Coal, oil, and natural gas received $5.9 trillion in subsidies in 2020, a figure that corresponded with roughly $11 million a minute, explicit subsidies accounting for eight percent of the total, the remaining 92 percent implicit subsidies.

Fossil fuel consumed about seven trillion dollars in subsidies or 7.1 percent of GDP in 2022, with explicit subsidies doubling since 2020 at 18 percent of the total subsidies, while close to 60 percent due to undercharging for global warming and local air pollution.

From the above, fossil fuel swallowed huge amounts of subsidies in increasing terms in recent years, especially since the Russian invasion of Ukraine, with explicit subsidies found in the Middle East and North America (MENA), Europe, Commonwealth of Independent States (CIS), East Asia and Pacific (EAP).

Peru included a number of transport fuels in its State Fuel Stabilization Fund in 2022, to curb the rise in prices, while a nation such as Thailand introduced a price cap of $0.85 per liter of petrol to promote subsidies, just as Egypt extended electricity subsidies it had planned to stop by the end of the 2021-2022 fiscal year.

Advanced countries committed more than $500 billion in extra-spending in 2022 to curtail energy bills of consumers, while Saudi Arabia led the G-20 in relations to fuel subsidies, spending about $7,000 per person, or roughly 27 percent of economic production, on both explicit and implicit energy subsidies.

China contributed by far the most to total subsidies at $2.2 trillion in 2022, followed by $760 billion by the United States, then Russia at $420 billion, India at $350 billion, and $310 billion for the European Union.

In sum, nations on a worldwide basis allocated huge sums in fuel subsidies to cushion price rises occasioned by Russia's invasion of Ukraine, a factor responsible for the recent increases in fuel subsidies.

In 2022, global crude oil production rose by a record 5.4 percent rate, much above 1.6 percent for 2021 and its 2010-2019 average of 1.3 percent, with a nation such as Saudi Arabia, which plays a prominent role among countries with large rises in fuel subsidies, increasing oil production by 16 percent.

Kuwait's crude oil production increased by 8.1 percent in 2022, while Iran's rose by 5.9 percent, with the United States raising production by 6.5 percent, and Canada by 2.6 percent.

Latin America's crude oil production grew by 3.9 percent, fuelled by the 3.9 percent growth in Brazil, while Russia, despite sanctions over the invasion of Ukraine, swelled its crude oil production by 3.1 percent.

According to experts, nations with increased crude oil production correlated directly with the very ones contributing greater amount of money on fuel subsidies.

Unfortunately, fuel subsidies impact the planet in a frightening way, because it fuels increased oil production, which in turn means a rise in carbon dioxide emissions, projected to grow by some 43.08 billion metric tonnes in 2050, in comparison to 35.3billion metric tonnes in 2018.

With carbon dioxide emissions projected to grow if nothing drastic happens, climate effects become intensified, meaning the trillions of dollars spent on fuel subsidies seem to be wasted, as it fuels the destruction of the world as we know it.

The way to go seems to be to address the issue of fuel subsidies. When fuel subsidies get reduced, global crude oil production will be curtailed. The curtailment of crude oil production means a great reduction in the emissions of greenhouse gases. The reduction in the emission of greenhouse gases may be a step towards addressing climate change.

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