'Criminally Insane': Subsidies That Harm the Environment Reach $2.6 Trillion Per Year

Governments across the world now spend a total of $2.6 trillion per year on subsidies that harm the environment, jeopardizing global climate and biodiversity targets, according to an analysis released Tuesday.

The analysis came in an updated report from the research group Earth Track, which found that harmful fossil fuel subsidies top $1 trillion annually and harmful agricultural subsidies top $600 billion. Governments also fund pollution and destruction in sectors such as water, construction, transport, forestry, and fisheries.

The $2.6 trillion total, which the report authors said was likely an underestimate, marked an $800 billion increase—or about $500 billion in real dollars—from $1.8 trillion cited in the initial report, released in February 2022.

In December 2022, the world's nations agreed to the Kunming-Montreal Global Biodiversity Framework, a deal that included, as target 18, a commitment to identify environmentally harmful subsidies (EHS) by 2025 and reduce them by $500 billion by 2030.

"Two years on from the signing of the landmark biodiversity plan, we continue to finance our own extinction, putting people and our resilience at huge risk," Christiana Figueres, the United Nations' chief climate diplomat when the Paris agreement was signed in 2015, toldThe Guardian. "Estimates are higher than previously thought—with at least $2.6 trillion now funding the destruction of nature, endangering the chances of meeting our nature and climate goals."

Private interests usually benefit from the harmful subsidies. Bill McGuire, an emeritus professor of earth sciences at University College London, responded to Earth Track's findings by spelling out this out.

"Want to know how criminally insane our political-economic system is?" he wrote on social media. "We are actually paying corporations to destroy the planet."

The report shows the massive scale of government investment in EHS across the world, with the $2.6 trillion total for 2023 amounting to about 2.5% of global gross domestic product.

Other estimates of EHS have been even higher. An International Monetary Fund working paper last year estimated that fossil fuel subsidies alone amount to $7 trillion annually. Subsidies are difficult to quantify as some are implicit, such as not applying an excise tax on fossil fuels that damage the environment.

Report co-author Doug Koplow of Earth Track told Common Dreams that the IMF paper included more externalities "rather than just fiscal subsidies," based on his recollection.

The Earth Track report found that increased global fossil fuel subsidies following the Russian invasion of Ukraine were the main reason for the $800 billion increase since the last report was written. "This example highlights the sensitivity of EHS to macroeconomic conditions," the report says.

In a statement, Koplow emphasized the importance of the cross-sectoral analysis, arguing that sectors, such as agriculture, are too often looked at in isolation. "It is the combined effect of subsidies to these sectors that compound to drive loss of nature and biodiversity resources," he wrote.

The analysis comes amid an onslaught of extreme weather this year that's been made more likely by fossil fuel-driven climate breakdown. Large-scale flooding devastated Central Europe this week, killing more than 20 people. The planet has seen record temperatures for 15 straight months.

Biodiversity loss also continues apace, with experts calling for strong action as the COP16 meeting of the United Nations Convention on Biological Diversity is set to begin in Colombia on October 21.