Amidst recurring promises from governments to curtail fossil fuel subsidies, a recent report reveals that these subsidies surged to an all-time high of $1.3 trillion last year. The report, conducted by the International Monetary Fund (IMF), examined both explicit and implicit subsidies for fossil fuels across 170 countries. Shockingly, explicit subsidies alone have more than doubled since the previous IMF assessment, escalating from $500 billion in 2020 to a staggering $1.3 trillion in 2022. Governments rushed to counteract the inflationary repercussions of Russia’s incursion into Ukraine and the surge in demand stemming from the economic rebound after the Covid-19 pandemic. These explicit subsidies encompass direct monetary support for fossil fuels through mechanisms like regulated prices set below global benchmarks and energy bill rebates.

The IMF also evaluated implicit fossil fuel subsidies, encompassing costs such as undercharging for environmental impacts and neglecting to levy taxes on consumption. When these factors were considered, the total subsidies ballooned to $7 trillion in 2022 – a staggering $2 trillion increase compared to 2020.

Coinciding with this report, the International Institute for Sustainable Development (IISD), a Canadian think tank, unveiled a study revealing that public funding allocated to explicit fossil fuel subsidies in G-20 nations alone skyrocketed more than fourfold to $1 trillion in 2022 compared to the previous year.

These two reports underscore the glaring disparity between nations’ professed goals to reduce fossil fuel dependence and their actual actions. In 2015, countries worldwide committed to 17 United Nations Sustainable Development Goals, vowing to phase out fossil fuel subsidies. This commitment was further emphasized at COP26 in 2021 when 197 countries agreed to expedite the elimination of what the agreement termed "inefficient subsidies."

Christopher Beaton, a researcher specializing in sustainable energy consumption at IISD, remarked, “While we are awash with government promises to phase out fossil fuel support, the reality is that there is a stark deficiency in implementation. Over the past two years, our global progress has regressed."

This regression carries grave implications for the world’s endeavor to limit global warming to 1.5 degrees Celsius above pre-industrial levels. Even at 1.2 degrees Celsius of warming, the planet experiences catastrophic heatwaves and disasters that are exacerbated by climate change. July of this year marked the hottest month ever recorded globally, amidst a summer of lethal wildfires, heatwaves, and floods.

Continued greenhouse gas emissions will only exacerbate climate volatility, and subsidizing fossil fuels exacerbates this peril. “Fossil fuel subsidies keep prices low, thereby boosting consumption, and they incentivize new projects that wouldn't otherwise materialize," noted Beaton.

The authors of the IMF report assert that eliminating explicit fuel subsidies and imposing taxes on environmental costs, including carbon dioxide and other air pollutants, could decrease global carbon dioxide emissions by 34% below 2019 levels by 2030.