IMF: Fossil Fuel Subsidies Reach Record High in 2022

Despite repeated commitments from governments worldwide to reduce fossil fuel subsidies, a recent report by the International Monetary Fund (IMF) has revealed that these subsidies surged to a historic high of $13 trillion in 2022.

The IMF report examined explicit and implicit subsidies for fossil fuels across 170 countries. It found that since the last IMF assessment, explicit subsidies alone had more than doubled, rising from $500 billion in 2020 to $1.3 trillion in 2022. Governments across the globe rushed to mitigate the inflationary impact of the Russia-Ukraine crisis and the surging demand due to the economic recovery from the COVID-19 pandemic. These subsidies were provided through activities such as regulating prices below international levels and offering direct monetary support through energy bill rebates.

The IMF also calculated implicit fossil fuel subsidies, encompassing low charges for environmental costs and the absence of consumption taxes. Including these factors, the total subsidies for 2022 surged to $7 trillion. This represented a $2 trillion increase compared to 2020.

This finding aligns with a report released earlier this week by the Canadian think-tank International Institute for Sustainable Development (IISD). The IISD report discovered that in 2022, public funds used by the G20 nations solely for explicit fossil fuel subsidies more than doubled from the previous year, reaching $1 trillion.

These two reports underscore the glaring disparity between nations' established goals to reduce fossil fuels and their actual actions. In 2015, countries worldwide signed 17 United Nations Sustainable Development Goals, including a commitment to gradually phase out fossil fuel subsidies. This commitment was further emphasized at COP26 in 2021 when 197 countries agreed to expedite the phase-out of what the agreement termed "inefficient subsidies."

Christopher Beaton, an expert at IISD researching sustainable energy consumption, remarked, "We've seen a lot of commitments from governments to gradually withdraw support for fossil fuels, but there's been a serious lack of follow-through. We've gone backward on an international level over the past two years."

This regression poses a severe threat to efforts aimed at limiting global warming to within 1.5 degrees Celsius above pre-industrial levels. Even at 1.2 degrees Celsius (2.2 degrees Fahrenheit) of warming, the world is already experiencing devastating heatwaves and disasters, which are exacerbated by climate change. July of this year was recorded as the hottest month globally, marked by deadly wildfires, heatwaves, and floods.

Continuing to emit greenhouse gases into the atmosphere will only amplify climate volatility, and continuing fossil fuel subsidies will heighten this risk. Beaton pointed out, "Fossil fuel subsidies keep prices artificially low, which increases consumption, and they encourage new projects that wouldn't have been undertaken otherwise."

The authors of the IMF report suggest that phasing out explicit fuel subsidies by 2030 and implementing taxation on environmental costs, including CO2 and other air pollutants, could lead to a 34% reduction in global CO2 emissions compared to 2019 levels.

OWELL Diesel and Gas Generators

In an energy-hungry world, fossil fuels remain a cornerstone, vital for diverse applications. Introducing OWELL Industries, pioneering in diesel and gas generator innovation. Addressing standby power needs and remote regions off the grid, OWELL's cutting-edge generators shine. Our diesel and gas gensets offer unwavering reliability, making them the go-to solution for critical backup and remote power requirements. With OWELL, embrace efficiency, versatility, and power, propelling industries forward while keeping the lights on in every corner. Choose OWELL generators for a robust energy future.

Hot Power Series

OWELL Cummins Series Marine Diesel Generator Set

OWELL CCEC CUMMINS SERIES diesel generator set

OWELL DCEC CUMMINS SERIES diesel generator set