Lacking carbon pricing, fossil fuels received $7 trillion in subsidies last year
Dana Nuccitelli, CCL Research Coordinator
Globally, carbon pricing covers about one-third of emissions, but in most cases the price is low. The lack of adequate carbon pricing is basically an implicit subsidy to fossil fuel companies, because society is picking up the tab for the damages done by unpriced carbon pollution via climate change. Then there are explicit subsidies from governments directly to fossil fuel companies.
The International Monetary Fund (IMF) tallies up these explicit and implicit fossil fuel subsidies every year and just came out with their report for 2022, estimating that these subsidies amounted to about $7 trillion last year, equivalent to over 7% of the global gross domestic product.
That's also a conservative number because the IMF prices the implicit climate costs at $60 per ton of carbon dioxide, but recent estimates of the 'social cost of carbon' are closer to $200 per ton. That could add another $5 trillion to the total fossil fuel subsidy estimate.