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More or Less: Behind the Stats
Do fossil fuels get $7 trillion in subsidies?
Nov 23, 2024
Governments are promising action against climate change while simultaneously pouring trillions into fossil fuel subsidies. An IMF report reveals a staggering $7 trillion in global subsidies, but the implications are complex. Most of this money benefits consumers with lower fuel prices rather than directly aiding oil producers. The discussion dives deeper into how these numbers are calculated and the changing landscape of subsidies, highlighting the disconnect between financial practices and environmental commitments.
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Quick takeaways
- The IMF's $7 trillion figure for fossil fuel subsidies encompasses both explicit financial aid and significant implicit societal costs from climate change and pollution.
- While explicit subsidies to fossil fuel producers are around $1.3 trillion, the majority of financial support actually assists consumers through cheaper fuel costs.
Deep dives
Understanding Fossil Fuel Subsidies
Governments around the world are reportedly spending around $7 trillion annually to subsidize the fossil fuel industry, a figure that has been repeatedly cited in discussions on climate change. However, this number primarily stems from an IMF report that takes into account both explicit and implicit subsidies. The report indicates that true explicit subsidies, which include direct payments and tax breaks to fuel producers, amount to only about $1.3 trillion. The majority of these subsidies are not directed to producers but rather help consumers, such as businesses needing cheaper fuel; hence only a small percentage benefits large oil companies.
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