The IMF Just Destroyed The Best Argument Against Clean Energy

Nasdaq
June 9, 2015

By Elias Hinck­ley:
For more than a decade, fos­sil fuel sup­port­ers have insisted that new clean energy tech­nolo­gies like wind and solar are far “too expen­sive” to replace our tra­di­tional fos­sil fuel dom­i­nated energy indus­tries. A recent report pub­lished by the Inter­na­tional Mon­e­tary Fund ((IMF)) has put a price on the direct and indi­rect sub­si­dies that sup­port fos­sil fuels as a counter argu­ment to the renew­ables are “too expen­sive” message.

The num­bers are stag­ger­ing. The expected sub­sidy for fos­sil fuels dur­ing 2015 is pro­jected to be $5.3 TRILLION — for one year! This means that approx­i­mately 6.5% of global gross domes­tic prod­uct (( GDP)) will be ded­i­cated in 2015 to just sub­si­diz­ing our use of fos­sil fuels. Or as The Guardian pointed out in its sum­mary of the IMF report, tax­pay­ers are pay­ing $10 MILLION per minute glob­ally in sub­si­dies for fos­sil fuels.

The idea that fos­sil fuels ben­e­fit from both direct and indi­rect sub­si­dies has been around for years, but analy­sis has gen­er­ally been done in pieces (some of it done very well — Nancy Pfund and Ben Healy at DBL Investors pub­lished an excel­lent analy­sis of direct sub­si­dies in the U.S. a cou­ple years back) or with­out com­plete data robust enough to stand up to cri­tique. The IMF report looks at direct incen­tives, local pol­lu­tion and pub­lic health effects, cli­mate changes, and a host of other costs to arrive at its pro­jected sub­sidy number.

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