While many nations use energy subsidies to shield consumers from rising prices, benefits tend to be grabbed by higher-income households. The outlays also sap funds available for bigger improvements to assist the wellbeing of the poor, such as health and education spending.
"Subsidies cause over-consumption of petroleum products, coal, and natural gas, and reduce incentives for investment in energy efficiency and renewable energy," the IMF said. "This over-consumption in turn aggravates global warming and worsens local pollution."
The removal of fossil-fuel subsidies would cut carbon dioxide emissions by 4.5 billion tonnes – or about eight times Australia's annual emissions. Sulphur dioxide pollution would also drop by 13 million tonnes if the subsidies ended.
The Fund listed the top three energy subsidisers as the United States ($US502 billion), China ($US279 billion), and Russia ($US116 billion). Petroleum and electricity subsidies accounted for three-quarters of the pre-tax subsidies, with natural gas accounting for most of the rest, and coal subsidies worth about $6 billion, the IMF said. The survey did not include subsidies received by renewable energy producers
"Subsidising clean energy is slightly more benevolent than subsidising a depletable, polluting resource," said Paul Burke, a research fellow at the Australian National University's Crawford School of Public Policy...
Construction site of the RWE coal power station near the Eemshaven, a port in the Dutch province of Groningen, shot by Wutsje, Wikimedia Commons, under the Creative Commons Attribution-Share Alike 3.0 Unported license
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