Fossil fuel companies are being subsidised by €4.74ttn a year, equivalent to €9m a minute every day, according to a report prepared for the IMF.
The report’s authors have advised the IMF that reforming the way governments subsidise energy consumption would deliver substantial fiscal benefits, and reduce healthcare costs and environmental damage.
“Environmental damages from energy subsidies are large, and energy subsidy reform through efficient energy pricing is urgently needed,” the report states.
Authors David Coady, Ian Parry, Louis Sears and Baoping Shang define subsidies as anything that protects energy consumers from paying the full cost of energy use. This includes both pre-tax and post-tax subsidies.
“Energy taxes remain the most effective and practical tool until such other instruments become widely available and implemented,” the report states.
“Although it may not be realistic to raise energy prices to efficient levels in one step, since there are uncertainties in the estimates of efficient levels of taxes, countries should take advantage of the low international energy prices and gradually move toward efficient energy pricing.”
© Irish Examiner Ltd. All rights reserved