(3BL Media/Justmeans) - A lot of people who donât like change say that renewables are only economical because of government subsidies. First of all, even as prices continue to fall, there are already a number of places where renewables are cost-competitive without any subsidies. Second, what most people do not realize is the extent to which conventional fossil fuels are subsidized. A recent report from the International Monetary Fund (IMF) sheds light on this.
They key findings of the study, as summarized on their website are as follows:
âFirst, post-tax energy subsidies are dramatically higher than previously estimated, and projected to remain high despite the sharp decline in international energy prices. Second, the vast majority of energy subsidies reflect domestic externalities, so countries should move ahead with energy subsidy reform unilaterally in their own interests. Third, the potential fiscal, environmental and welfare impacts of energy subsidy reform are substantial. Using the fiscal dividend to lower distortionary taxes or increase productive public spending could further improve welfare and economic growth.â
The numbers disclosed in this report are so monumental, you might want to make sure you are sitting down before reading them. The expected global subsidy for the year 2015 is $5.3 trillion dollars. Thatâs equivalent to 6.5% of the global gross domestic product (GDP) and over 29% of the projected US GDP for the same year. According to The Guardian, that works out to $10 million per minute. Thatâs just the subsidies. By the time all that all is converted into motor fuels, consumers spend an additional $5.5 trillion. All told, that means, we spend roughly 13.2% of the global GDP to be able to fill up our cars with fuel. Thatâs more than half of what an average of 83 countries tracked by USDA, spend on food. That number also edges out the total government health spending, according to the World Health Organization (WHO), which came in at 6.0% (in 2013, the latest year for which figures were available).