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IMF: Want to Fight Climate Change? Get Rid of $1.9 Trillion in Energy Subsidies.

For related articles and more information, please visit OCA's Environment and Climate Resource Center page and our Politics and Democracy page.

What's the simplest way to tackle global warming? Make sure that fossil fuels are priced properly and not subsidized.

That's the core idea behind a large new report (pdf) from the International Monetary Fund, which argues that the world "misprices" fossil fuels to the tune of some $1.9 trillion per year.

Eliminating these subsidies, the IMF argues, and replacing them with appropriate carbon taxes could cut global greenhouse-gas emissions by 13 percent, curtail air pollution, and shore up the finances of many poorer countries now in debt trouble.

So let's take a closer look at the IMF's numbers. Energy subsidies, the report argues, come in two very different flavors:

-$480 billion in direct subsidies for consumption. This is what we typically think of as "fossil fuel subsidies." In 2011, governments around the world spent some $480 billion to lower the price of petroleum, natural gas, coal, and electricity for their citizens.


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