This week I tried to educate myself a little more on fossil fuel subsidies because I saw a pretty shocking stat claiming that oil, gas and coal companies received 7 Trillion in subsidies in 2022, which works out to $13M every minute.
The stat comes from the International Monetary Fund, who's mission is to support sustainable growth and economic prosperity of its 190 member countries. It does this largely through research, loans and 'advice'.
The IMF is now weighing in on Climate Change, by suggesting that we need to stop subsidizing the Oil & Gas industry if we want to hit climate targets.
What exactly are the subsidies?
The IMF breaks them down into two categories.
1- EXPLICIT SUBSIDIES - which essentially means undercharging for the actual cost. For example, "80 percent of global coal consumption was priced at below half of its efficient level in 2022" (IMF).
2- IMPLIED SUBSIDIES - which accounts for the environmental and health costs that the Oil & Gas sector is NOT paying for as a result of fossil fuel consumption. For example all the health costs associated with decreased air quality as a result of burning coal.
The key is that nearly 60% of the 7 Trillion is for the undercharging of the health and environmental implications of burning fossil fuels.
So of course, the Oil and Gas sector is FUMING (pun intended) because they claim the IMF is inflating the Implied subsidies and the IMF should stay in its lane of economics and not get involved in Climate Change.
"Climate policy is clearly beyond the scope of any financial regulator’s expertise." (Tilak Doshi, Forbes Contributor and Oil & Gas Economist)
But the part that really is the most interesting to me is for all the Hippies who claim 'Capitalism' is the root cause of our environmental issues, we now have a bunch of economists arguing that a combination of free market economics and true accountability for damage done will bring the Oil and Gas industry down to a size that will effectively stop climate change.
And I LOVE that perspective!
Thanks always for geeking out with me on Climate change.
