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IMF, World Bank Recommend Slashing Fossil Fuel Subsidies, Putting Price on Carbon

1 min. read

As this article illustrates, the worldwide consensus is growing that fossil fuel subsidies need to go, and that a price on carbon pollution would be an effective way to combat climate change while also accelerating the transition to a clean energy economy.

Global financial institutions are recommending raising money to fight climate change by trimming subsidies for fossil fuels, putting a price tag of $25 per ton on carbon emissions and collecting a surcharge on aviation and shipping fuels.

The recommendations are part of a draft paper by the International Monetary Fund, the World Bank and other international groups prepared for a meeting Friday in Washington of G20 finance and development ministers...

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The draft paper says the starting point should be a review of fossil fuel subsidies, amounting to $40 billion to $60 billion a year. But many of those subsidies are handed out in poor countries, where people living on the edge of subsistence need help, for example, to buy cooking gas. Still, subsidy reforms in industrialized countries and emerging economies could contribute $10 billion a year to a climate fund, it said.

By the way, the article also points out that "investment in renewable energy, energy efficiency, electric cars and other forms of green energy totaled $500 billion, including more than $200 billion in developing countries" last year. In coming years, these totals are likely to grow rapidly, particularly if countries adopt the types of policies recommended by the World Bank, IMF, etc.