The IMF is singling out the subsidies that the fossil fuel industry continues to receive.

The fossil fuel industry receives subsidies worth $ 11 million per minute, according to an analysis by the International Monetary Fund.

The IMF found that the production and flaring of carbon, oil and gas were subsidized to the tune of $ 5.9 trillion in 2020, without a single country pricing all of its fuels enough to reflect their total fuel costs. supply and environmental. Experts said the subsidies were "fueling the fire" of the climate crisis, at a time when rapid reductions in carbon emissions were urgently needed.

Explicit subsidies that reduce fuel prices represent 8% of the total and tax exemptions 6%. The most important factors were not being able to make polluters pay for deaths and health problems caused by air pollution (42%) and by heat waves and other impacts of global warming (29%) .

Pricing fossil fuels that reflect their true cost would reduce global CO2 emissions by a third, IMF analysts said. This would be a big step towards achieving the internationally agreed 1.5 ° C target. Keeping this goal close at hand is a key element of the UN Cop26 climate summit in November.

Agreeing on rules for carbon markets that allow for adequate pricing of pollution is another goal of Cop26. “Fossil fuel price reform could not be more timely,” IMF researchers said. Ending fossil fuel subsidies would also prevent nearly a million deaths a year from toxic smoke laden air and save governments billions of dollars, they said.

“ There would be huge benefits to reform, so there is a huge amount at stake,” said Ian Parry, lead author of the IMF report. “Some countries are reluctant to raise energy prices because they think it will hurt the poor. But keeping fossil fuel prices low is a very inefficient way to help the poor, as most of the benefits go to the richer households. It would be better to direct resources directly to poor and vulnerable people in need of assistance. "

With 50 countries committed to net zero emissions by mid-century and more than 60 carbon pricing systems around the world, there are encouraging signs, Parry said: “But we are only scratching the surface, and there is a long way to go. "

The G20 agreed in 2009 to phase out "inefficient" fossil fuel subsidies. In 2016, the G7 set a deadline of 2025, but it is clear that since all these decisions, very little progress has been made. Last July, a report showed that G20 countries had subsidized fossil fuels by trillions of dollars since 2015, the year the Paris climate agreement was signed.

"To stabilize global temperatures, we urgently need to move away from fossil fuels rather than adding fuel to the fire," said Mike Coffin, senior analyst at think tank Carbon Tracker. "It is essential that governments stop supporting a declining industry and instead seek to accelerate the transition to low carbon energy and, beyond that, our future."

“As the host of Cop26, the UK government could play an important global leadership role in ending all fossil fuel subsidies and stopping new rounds of licenses in the North Sea, ” he said. declared. The International Energy Agency (IEA) said in May that development of new oil and gas fields must stop this year to meet climate targets.

The full IMF report found that prices were at least 50% below their actual costs for 99% coal, 52% diesel and 47% natural gas in 2020. Five countries accounted for two-thirds of the subsidies: China, the United States, Russia, India and Japan. Without action, subsidies will rise to $ 6.4 trillion by 2025, the IMF said.

The right price for fossil fuels would reduce emissions, for example, by encouraging power producers to switch from coal to renewables and making electric cars an even cheaper option for drivers. International cooperation is important, Parry said, to allay fears that countries may lose competitiveness if fossil fuel prices are higher.

“The IMF report is disturbing read, highlighting one of the biggest flaws in the global economy ,” said Maria Pastukhova of think tank e3g. “The IEA Carbon Neutral Roadmap predicts that $ 5,000 billion is needed by 2030 to put the world on the path to a climate-safe future. It is infuriating to realize that much-needed changes could start to happen now, if only governments could stop getting involved in the fossil fuel industry in so many large economies. "

“Fossil fuel subsidies have been a major obstacle in the G20 process for years,” she said. “Now all eyes are on the summit of G20 leaders at the end of October. "

Ipek Gençsü of the Overseas Development Institute said: “[Subsidy reform] requires support for vulnerable consumers who will be affected by rising costs, as well as for workers in industries that will simply have to shut down. It also requires information campaigns, showing how savings will be redistributed to society in the form of health, education and other social services. A lot of people oppose subsidy reform because they just see it as governments taking something away, and not giving it back. "

The G20 countries emit nearly 80% of greenhouse gases globally. More than 600 global companies in the We Mean Business coalition, including Unilever, Ikea, Aviva, Siemens and Volvo Cars, recently joined forces with G20 leaders to end fossil fuel subsidies by 2025.