The Cheat Sheet

Fossil fuel: A hidden price tag and a sick world

JINOY JOSE P | Updated on January 09, 2018 Published on August 16, 2017


Ruing a bad buy?

A sad one, to be frank.

Sorry, but why ‘a sick world’?

Well, I came across this interesting report last week that made me sit back and think about fossil fuel subsidies and their impact on our collective well-being. The report — Hidden Price Tags: How Ending Fossil Fuel Subsidies Would Benefit Our Health, released by European nonprofit Health and Environment Alliance (HEAL) — for the first time tried to compare fossil fuel subsidies (which Bloomberg recently called “the world’s dumbest policy”) and health costs from air pollution. Most likely, we don’t get to know of this hidden price tag that makes us sick, the report says. It is generally estimated that direct subsidies to dirty fuels stand at around $450 billion worldwide.

That’s a lot of money going up in smoke!

There’s more. Just last week, a study published in the journal World Development and authored by folks working at the IMF estimated that in 2013 alone 6.5 per cent of global GDP went to subsidising fossil fuels. That’s some $4.9 trillion. Mind you, India’s GDP is just a little over $2 trillion. Of the nearly $5 trillion ‘fossil dole’, undercharging for global warming accounted for 22 per cent, air pollution 46 per cent, vehicle ‘externalities’ 13 per cent, supply costs 11 per cent and consumer taxes were 8 per cent.

Oh, strange maths, this!

Yes, but not many know, or have bothered to ponder over the obvious fact that, most of these subsidies end up hurting people, through fossil-fuel induced air pollution. The HEAL report, for instance, clearly shows fossil fuel subsidies support an industry that causes “premature deaths, ill-health and huge health costs”. And the health costs linked with fossil fuels are over six times higher than the direct subsidies doled out by governments. That is according to HEAL’s estimates $2.8 trillion against $444 billion (that’s what G20 governments spent in subsidies to fossil fuel in 2014). Yes, the HEAL study came much before the IMF researchers made their staggering estimate. Experts believe that the real numbers would be much higher.

This must stop.

Yes. HEAL has urged policymakers to end fossil fuel subsidies for the sake of health, and use the money to support healthcare innovations and renewable energy projects. Every year air pollution from mostly fossil fuel combustion affects the lives of about 6.5 million people worldwide. Societies across the globe pay for these ailments. In the UK, for example, health costs from fossil-fuel-driven air pollution are almost five times higher than the subsidies paid. This means, not only did the government give away $6.5 billion of public money to one of the world’s wealthiest industries, but that gift cost them another $30.7 billion in health costs alone from premature deaths from air pollution.


HEAL wants policymakers to phase out fossil fuel subsidies by 2020 for developed nations and by 2025 for low-income economies. This is important because as another recent study has shown, G20 countries provide four times more public money to fossil fuels than to renewable energy. The public funds wasted include soft loans and guarantees from governments along with huge indirect subsidies on petrol, diesel, coal, etc. This matters a lot in India, which has recently been criticised for exempting dirty fuels such as diesel from the ambit of GST.

Oh, why?

Many fear such moves will end up triggering ecological damage and health problems. The fuel industry’s argument that such cuts will affect the poor’s access to energy, doesn’t hold as most victims are the poor themselves. Governments must scrap fossil doles and focus on renewables, which will benefit the poor and lower-income people much more than dangerous fuels.

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Published on August 16, 2017
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This article is closed for comments.
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