To what level do countries subsidized the use of fossil fuels for energy? The International Monetary Fund has performed the calculations, issuing a report last week that puts the global total at $1.9 trillion a year.
Roughly $500 billion comes in the form of lowering the price of oil, natural gas, coal and electricity, mostly in developing countries.
The rest stems from what that IMF calls “mispricing,” industrial nations failing to apply levies to fossil fuels that reflect their cost in terms of air pollution and greenhouse gases heating the planet. No surprise that the United States leads the way in this category, the IMF putting the subsidies at $502 billion a year. China rates as the second largest such subsidizer, $279 billion annually, with Russia third at $116 billion.
The IMF grasps the political difficulties in wealthy and poorer nations of ending or even narrowing such support. Worth weighing is the analysis that neither set of countries gains from the subsidies in the long run, resources diverted from such priorities as education and health care or reducing deficits and bringing budgets into shape.
In addition, the subsidies tend far more to benefit the rich, who use more energy.
All of it should serve as a prod in this country toward more imaginative thinking about our fiscal challenges. Apply a modest carbon tax of some sort, and the country gains on two fronts. The levy would generate revenue to help lower deficits and pay for key investments. It also would reflect leadership in beginning to mobilize the planet to address the risk in climate change.