Fossil subsidies at new record levels – even though they are to be phased out. The trend goes in the opposite direction

Ebba Busch is the Minister for Energy, Business and Industry in the Swedish Government. Subsidies to oil, coal and gas landed at a new record level in 2022, they doubled compared to 2021. Despite promises to phase out fossil fuel subsidies, they instead increase sharply. Last year, a new record was set, when oil, coal and gas were subsidized by SEK 145 million every minute (!), according to the International Monetary Fund, IMF. The Swedish government's decision to lower the tax on petrol and diesel may not be classified as a subsidy, but it has the same effect, says Thomas Sterner, professor of environmental economics. This year's summer was the hottest on record. Extreme weather events such as drought, torrential rain, forest fires, which caused many deaths, have been reported from several parts of the world. Fossil fuels are the biggest cause of climate change and yet the world's countries continue to use them and even subsidize them. Last year, fossil fuel subsidies set a new record. Globally, they amounted to 7 trillion US dollars, 7 thousand billion dollars, corresponding to approximately 78 thousand billion kroner, according to a study from the IMF. Fossil fuel subsidies to reach seven trillion US dollars by 2022. That is almost twice as much as the world spends on education (!). And the sum is sky high above the 100 billion US dollars that the world's rich countries have promised as climate finance to poor countries. A sum that has still not been achieved. The subsidies for fossil fuels are ten to twelve times as large as the subsidies for renewable fuels, according to Jakob Skovgaard, associate professor of political science at Lund University and expert on climate-damaging subsidies. Fossil fuel subsidies to reach seven trillion US dollars by 2022 Source: IMF - The game plan for energy types is unfair in favor of fossil fuels, he says. Countries have for several years promised to phase out the fossil subsidies. In the "Glasgow Pact" that the countries of the world agreed on during COP26 two years ago, it states that "unnecessary fossil subsidies must be phased out". Before the meeting in Glasgow, hundreds of international companies in an open letter called on the world's countries to make decisions that lead to the phasing out of fossil fuel subsidies by the year 2025. But in reality the trend is in the complete opposite direction, in both 2021 and 2022 the subsidies have instead increased sharply. In the most recent evaluation of the UN's global sustainability goals, the phase-out of fossil subsidies is one of the sub-goals where progress is going backwards. The IMF sums up direct subsidies that lower the price of fuel for consumers and indirect subsidies, the costs in the form of, for example, climate change and bad air that fossil fuels cause society. The direct subsidies roughly doubled in 2022 compared to the previous year and amounted to approximately 1.3 trillion US dollars, close to 15 trillion kroner. The reason was the reaction of countries to the rising energy prices due to Russia's invasion war in Ukraine. Those measures benefited rich households much more than poor ones, according to the IMF. A similar estimate has previously been made by the International Energy Agency, IEA - The increase is due, among other things, to the fact that some countries set a fixed price for fuels, when the market price rises, the cost for the state to replace the difference increases, says Jakob Skovgaard, associate professor at Lund University. https://www.dn.se/varlden/fossila-subventioner-pa-nya-rekordnivaer-trots-att-de-ska-fasas-ut/