Study calls for reform to energy subsidiesMay 21, 2015
Energy subsidies may be outdated and could be much more costly than previously thought
A new study from the International Monetary Fund suggests that the cost of fossil-fuels is much higher than many believe. The study has found that the post-tax subsidy for energy, which also represents the environmental and health costs associated with traditional forms of power, will be $5.3 trillion in 2015. This is approximately 6% of the global gross domestic product and this is more than twice as high as the original predictions from the International Monetary Fund concerning the cost of energy.
Air pollution is having an impact on health in many parts of the world
The organization notes that its predictions in the latest study are higher that initial estimates because of access to more detailed data from several countries. This data comes in many forms, such as the effects of air pollution on the health of a populace and how this pollution is increasing due to the use of fossil-fuels. Energy subsidies in several countries remain strong, which is doing little to help the environment. These subsidies are typically directed toward traditional energy companies, which have a major stake in the fossil-fuels market.
Energy subsidies have fallen by $190 billion from 2011 to 2015
The study calls for some reform to be made when it comes to energy subsidies. Currently, Asia accounts for nearly half of the world’s energy subsidies. Funding for traditional energy projects is quite common, but some countries are taking steps to reduce the subsidies they provide to the energy sector by a significant margin. According to the study, global energy subsidies have fallen by $190 billion from 2011 to 2015.
Environmental taxes could be an alternative to energy subsidies
Energy subsidies have helped establish a relatively strong energy infrastructure, but they have proven to be quite costly for developing and already well developed countries. The International Monetary Fund suggests that introducing environmental taxes could be a much better plan for countries, and such taxes could replace energy subsidies in the future. These taxes would provide countries with a new source of revenue and would also encourage energy companies to adhere to new environmental standards.