Looking at pictures of the Los Angeles wildfire devastation or closer to home, how a tornado tore through Mangawhai, it's obvious that the climate emergency is very real and hugely damaging. To the point that insurance is becoming way too expensive for many people, or impossible to obtain in some areas.
What are we doing about it? Well, stats compiled by Our World In Data and data from the International Monetary Fund (IMF) suggest we're subsidising the fossil fuels that accelerate climate change enormously. IMF suggests the explicit subsidies to producers and consumers, along with implicit subsidies amount to US$7 trillion.
That is a mind-bogglingly large number; Our Word In Data says it's around seven per cent of the world's gross domestic product (GDP). Some oil producing countries such as Saudi Arabia, Turkmenistan, Libya, and Algeria spend heaps on fossil fuel subsidises, over US$500 per person and sometimes over US$1000 per capita.
What are the subsidies like in our part of the world? In the case of Aotearoa New Zealand, we subsidise fossil fuels, probably more than what people realise.
Although the amount is down steeply from the peek of US$9.75 pp in 2012, it is rising again and reached US$3.70 pp in 2021.
That's nothing compared to Australia, currently roasting in a heatwave with the fire danger being "extreme." It subsidises fossil fuels by US$359.50 per capita.
The IMF said there's been agreement among the Group of 20 advanced and emerging economies to phase out inefficient fossil fuel subsidies since 2009. Some countries have done so, including India, Morocco and Ukraine with taxes being introduced in certain nations.
This is what needs to happen, the IMF said in 2023: subsidies out, price increases phased in, because artificially keeping fossil fuel prices low has a number of negative consequences:
"Subsidies are intended to protect consumers by keeping prices low, but they come at a substantial cost. Subsidies have sizable fiscal consequences (leading to higher taxes/borrowing or lower spending), promote inefficient allocation of an economy’s resources (hindering growth), encourage pollution (contributing to climate change and premature deaths from local air pollution), and are not well targeted at the poor (mostly benefiting higher income households).
Removing subsidies and using the revenue gain for better targeted social spending, reductions in inefficient taxes, and productive investments can promote sustainable and equitable outcomes. Fossil fuel subsidy removal would also reduce energy security concerns related to volatile fossil fuel supplies," the IMF said.
This is not news. The question now is how bad climate disasters and ensuing economic damage has to become before there's full popular support to remove fossil fuel subsidies.
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