‘Funds ‘Wasted’ on Fossil Fuel Subsidies Should Be Redirected’

Emmanuel Addeh in Abuja

The World Bank has said that the trillions of dollars in government subsidies ‘wasted’ on fossil fuels could be redirected to managing climate change and accessing more productive and sustainable solutions.

A report by the organisation stated that countries spend about six times what they pledged to spend on renewable energies and low-carbon development on fossil fuel subsidies.

Redirecting the trillions in government subsidies for fossil fuels, the report said, could unlock at least $500 billion that could be put to more sustainable uses.

Titled: “Detox Development: Repurposing Environmentally Harmful Subsidies”, the report found that direct government subsidies for agriculture, fishing, and fossil fuels combined are around $1.25 trillion a year—around the size of a big economy such as Mexico. 

Direct, or explicit subsidies, combined with implicit subsidies for fossil fuels, agriculture, and fisheries, exceed $7 trillion annually, which is around 8 per cent of global Gross Domestic Product (GDP), according to the report.

Besides, it stated that implicit subsidies – a measure of the subsidies’ impact on people and the planet – amount to over $6 trillion a year and the burden fall mostly on the poor.

“To subsidise fossil fuel consumption, countries spend about six times what they pledged to mobilise annually under the Paris Agreement for renewable energies and low-carbon development,” the World Bank said.

“Redirecting these subsidies could unlock at least half a trillion dollars towards more productive and sustainable uses,” the bank said.

Senior Managing Director of the World Bank, Axel van TTrotsenburg said: “People say that there isn’t money for climate but there is – it’s just in the wrong places.

“If we could repurpose the trillions of dollars being spent on wasteful subsidies and put these to better, greener uses, we could together address many of the planet’s most pressing challenges.”