Despite COP26 Pledge, Fossil Fuel Subsidies Surge
Global fossil fuel subsidies have surged by $2 trillion, reaching a staggering $7 trillion, defying the commitment made by world governments at the COP26 climate summit two years ago. The goal was to phase out “inefficient” fossil fuel subsidies to combat global warming.
IMF Report Highlights Surge
The International Monetary Fund (IMF) reveals that this increase is a response to governments worldwide seeking to shield consumers from escalating energy prices. Despite the COP26 deal, which aimed to eliminate subsidies, the IMF report indicates a contrary trend.
EU Seeks Stricter Deadline
At the recent climate gathering in Dubai, EU countries proposed tightening the COP26 deal by pushing for a 2030 deadline for subsidy elimination. However, the level of support for this proposal remains uncertain.
EU’s Increased Support
Post-Glasgow, several EU governments, including those of the EU, increased support for fossil fuels, mainly due to concerns about energy security after Russia’s invasion of Ukraine.
China Leads in Subsidies
China holds the world’s highest fossil fuel subsidies, reaching $2.2 trillion in 2022, constituting 12.5% of the country’s total GDP. The majority of these subsidies fall under the “implicit” category, covering undercharging for environmental costs or forgoing tax revenues.
US Complexity in Subsidies
In the United States, fossil fuel subsidies are intricate and extend throughout the tax code. The IMF estimates these subsidies at $760 billion in 2022, second only to China. The complexity includes tax breaks like intangible drilling costs, allowing deductions for oil well drilling expenses.
Eliminating the US tax break, known as intangible drilling costs, could generate an estimated $13 billion over a decade, according to the Joint Committee on Taxation.
The surge in fossil fuel subsidies raises concerns about the world’s commitment to a greener future despite climate pledges.
Source：thisdaylive.com
