Governments Pay $5.3 Trillion in Global Energy Subsidies

Government globally subsidizes consumers’ energy costs by a total of $5.3 trillion, about 6.5% of global GDP and more than the gross domestic product of all but the world’s largest two economies, the United States and China. The total is also likely to be higher than global spending on health care, which amounted to an estimated 6% of global GDP in 2013. The energy subsidy estimate reflects the 2015 total.

The energy subsidy costs were reported on Monday by the International Monetary Fund (IMF), which defines energy subsidies as “the difference between what consumers pay for energy and its ‘true costs,’ plus a country’s normal value added or sales tax rate.” The “true costs” of energy include supply costs and the damage that energy consumption “inflicts on people and the environment.” The damages come from carbon emissions and global warming. The IMF says, “Most of these externalities are borne by…