IMF says global subsidies to fossil fuels amount to $1.9 trillion a year … and that’s probably an underestimate

IMF says global subsidies to fossil fuels amount to $1.9 trillion a year … and that’s probably an underestimate by David Roberts, March 28, 2013, Grist
A new report [PDF] from the International Monetary Fund tries to tally up fossil fuel subsidies around the world and finds that they add up to an eye-popping $1.9 trillion a year. That’s 2.5 percent of global GDP! Brad Plumer has a typically lucid summary on the report’s conclusions, but I want to dig in a little on one part, because believe it or not, the IMF’s conclusion may be too conservative. The real truth about global fossil fuel subsidies may be more eye-popping yet. So, where does that $1.9 trillion come from? Around $480 billion of it comes from direct subsidies, i.e., government handing out money. This is what people usually think of when they hear “subsidies.” Contrary to popular opinion, the developed world does very little of this kind of thing. … But my focus here is on the other $1.4 trillion, which is IMF’s tally of “the effects of energy consumption on global warming; on public health through the adverse effects on local pollution; on traffic congestion and accidents; and on road damage.” These are the “externalities” you’re always hearing about, and by failing to make fossil fuel companies pay for them, governments are implicitly subsidizing those companies. IMF says calls this under-taxing of fossil fuels “mispricing,” but it’s easier to think of them as indirect subsidies.
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As enviro hero Paul Hawken is fond of saying, “we are stealing the future, selling it in the present, and calling it GDP.” I can’t think of a better description of these fossil fuel subsidies. … The heedless radicalism and grotesque immorality of it are breathtaking. [Emphasis added]

IMF Paper