The human, environmental and economic toll of these subsidies is shocking to the conscience. The authors found that if fossil fuels had been fairly priced in 2015, global carbon emissions would have been slashed by 28 percent. Deaths from fossil fuel-linked air pollution would have dropped by nearly half.
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Oil, gas and coal companies — and their stooges in public office — have long argued that making consumers pay for the full impacts of fossil fuel use would cripple the economy. The IMF experts call bullshit on this idea, revealing that the world would, in fact, be more prosperous. Eliminating subsidies for fossil fuels would have created global “net economic welfare gains” in 2015 of “more than $1.3 trillion, or 1.7 percent of global GDP,” the study found. (These net gains are “calculated as the benefits from reduced environmental damage and higher revenue minus the losses from consumers facing higher energy prices.”)
For the United States, the $649 billion in fossil fuel subsidies exceeded even the extravagant amount of money the country spent on defense. To offer a sense of scale, Pentagon spending accounted for 54 percent of the discretionary federal budget in 2015. In comparison to another important, but less well-funded part of the federal budget, fossil fuel subsidies were nearly 10 times what Congress spent on education. Broken down to an individual level, fossil fuel subsidies cost every man, woman and child in the United States $2,028 that year.
At the opening of the IMF’s spring meetings in April, Managing Director Christine Lagarde laid out the benefits she sees in properly pricing fossil fuels. “The numbers are quite staggering” she said, referring to the savings that could be achieved “fiscally, but also in terms of human life, if there had been the right price on carbon emission as of 2015.”
Lagarde continued to rattle off the benefits to humanity of realizing these savings. “There would be more public spending available to build hospitals, to build roads, to build schools and to support education and health for the people,” she said.
For Lagarde and the IMF, the conclusion was obvious: “We believe that removing fossil fuel subsidies is the right way to go.”