Air Quality

Published on August 6th, 2015 | by Zachary Shahan


$5.3 Trillion A Year In Fossil Fuel Subsidies Is Idiotic

August 6th, 2015 by  

Originally published on Gas2.

Ah, society — takes us decades to turn a simple, life-saving corner. Subsidizing fossil fuels in the 21st century has got to be one of the dumbest things society has ever done… (and we’ve done a lot of dumb things). We have cheaper alternatives that don’t kill us and cause all kinds of health problems and suffering beforehand. We’ve got locally available, renewable resources that don’t have us exporting billions of dollars a year to countries in the Middle East, Venezuela, etc. We’ve got zero-emission technologies that won’t fry our planet and burn much of the human race. But we choose to continue subsidizing dirty, toxic, expensive fossil fuels instead.

IMF-fossil-fuel-subsidiesThe G20 “wised up” to the idiocy and agreed two years ago to phase out fossil fuel subsidies, but a new study from the International Monetary Fund (IMF) finds that we continue to subsidize fossil fuels with trillions of dollars of citizen-earned cash. According to the study, the US dumps a ridiculous $700 billion a year on the dirty subsidies for the dirty piles of coal, gas, and oil. That’s $2,180 per American per year. Yep, aside from your electricity and gas bills, you are essentially sending $2,000+ to oil, gas, and coal companies because… because… well, they need our help, no?

Australia, where the recent G20 meeting was held, has its citizens helping these poor industries to the tune of $1,260 per person. The UK gives $41 billion a year, which comes to $635 per person. Developing countries Mexico, India, and Indonesia average $250 per person per year.

As a percentage of GDP, the subsidies come out as follows:

  • USA: 3.8%
  • Australia: 2%
  • UK: 1.4%
  • China: 20%
  • India: 12%
  • Ukraine: 60%


The world as a whole subsidizes fossil fuels with $5.3 trillion in subsidies per year. Subsidies included in the report go beyond simple tax breaks, direct subsidies, etc., and also include externalities (something I consistently argue should be done). Those include the pollution that causes innumerable health problems and premature deaths as well as the harmful effects of global warming and climate change.

If we were brave enough to cut these subsidies, the IMF estimates that 1.6 million premature deaths from outdoor air pollution a year would be prevented, about 50% of those that occur, and global CO2 emissions would be cut 20%.

It seems like common sense, no? Cut the damn subsidies. Stop giving companies trillions of dollars a year to kill us faster.

The UAE is doing it… somewhat.


  1. IMF Figures Show UK Government Still Subsidising Fossil Fuel, While Renewables Are Slashed
  2. The IMF Just Destroyed The Main Argument Against Clean Energy
  3. Fossil Fuels Subsidies Cost World $5.3 Trillion A Year – $10 Million A Minute
  4. Energy Subsidy Nonsense — Energy Subsidy Narrow-Mindedness Gets Old
  5. Oil Subsidies & Natural Gas Subsidies — Subsidies For The Big Boys
  6. G20 Leaders Agree To Phase Out “Inefficient” Fossil Fuel Subsidies
  7. G20 Supporting Fossil Fuels To The Tune Of $88 Billion

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About the Author

is tryin' to help society help itself (and other species) with the power of the word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession and Solar Love. Zach is recognized globally as a solar energy, electric car, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, and Canada. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in. But he offers no professional investment advice and would rather not be responsible for you losing money, so don't jump to conclusions.

  • Mike Dill

    once again they completely neglect to mention that another 7% of the US GDP supports the military in controlling the access to global petroleum supplies. That make USA NUMBER 1! (sadly)

  • vensonata

    I have often pondered the subsidization of energy. It seems that it is a political matter because everybody uses electricity and gasoline and even slight resentment can defeat a political party. And the opposite: a baby bonus; a tax deductible lunch for a union; and low electric bills, are enough to win an election. It is irrational but hey, that is not news, is it?

  • Ross

    Hurricane Sandy cost the insurance industry $68 billion that will inevitably be passed on to the wider economy in increased premiums. They should be able to sue the Fossil Fuel giants to recover some of this money. The increased sea level due to Global Warming made it worse.

  • crevasse

    It would be interesting to see what $5.3T in subsidies would do to the renewal energy revolution. Anybody have any idea how much in subsidies are given to solar, wind, battery industries?

    • Bob_Wallace

      No real data but we could make a very rough guess. Wind and solar are eligible for a 2.3c/kWh production tax credit for the first ten years of their production.

      In 2014 solar produced 18,321,000,000 kWh. If every kWh was receiving the 2.3c subsidy that would be $421,360,000.

      Wind produced 181,791,000,000 kWh. If every kWh was receiving the 2.3c subsidy that would be $4,181,193,000.

      All together about $4.6 billion vs. $700 billion for fossil fuel subsidies. 152x more for fossil fuels.

      ($4.6B is a very rough number. Not to be taken as gospel.)

      eta: I’m not aware of batteries or any other storage being subsidized. There was some economic stimulus money used to build battery plants but aside from that….

  • eveee

    Zach – I like the new Zach. Taking off the gloves. With some humor. Or maybe its the original Zach. Yes. Billions in FF subsidies is idiotic.

    Reminds me of another plain talker.. that makes me laugh.

    Yea. FF subsidies. Money wasted. Like 100 year old FF companies need subsidies.

    Because they can’t make profits?

    Well not anymore.

  • Agree with phasing out fossil fuel subsidies. It’s important that the subsudies get re-purposed to incentivize renewable energy.

    Raising energy prices by any means will be bad for the economy. Helping to make renewabales cheap will both foster more renewable energy production and a healthy economy based on cheap clean energy.

    • eveee

      You got that right. Putting money into renewables will increase jobs, lower energy costs, and boost the economy.
      Throwing money into a losing FF cause will sink the economy.

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