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subsidies
'Criminally Insane': Subsidies That Harm the Environment Reach $2.6 Trillion Per Year
"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."
Sep 18, 2024
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."
Global spending on subsidies that harm environment rises to $2.6tn (£2tn).
Subsidies for fossil fuels, deforestation, over fishing, intensive farming, water pollution.
Companies and shareholders profit, people pick up the tab for consequences.https://t.co/g7VCeA4SLI
— Prem Sikka (@premnsikka) September 18, 2024
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.
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Report Reveals How US Taxpayers Are Unwittingly Subsidizing Climate Lies
"It is high time for the American public to understand just how much charitable money is funding climate change disinformation and to recognize the key individuals behind this effort."
Sep 18, 2024
A report published Wednesday identifies nearly 140 "climate disinformation organizations" in the United States financed by wealthy donors who receive massive subsidies from the nation's taxpayers.
The analysis by the Institute for Policy Studies (IPS) and the Climate Accountability Research Project (CARP) explains that wealthy donors are "pouring billions of dollars" into nonprofit organizations to "advance misleading, self-serving agendas that do irreparable harm to our planet"—all while reaping the benefits of charitable contribution deductions in the U.S. tax code.
"Funds directed to fossil fuel industry-friendly think tanks and policy groups help turn disinformation into accepted truth and sow doubt about science," the analysis notes. "Then, these ideas get turned into action—or, more often, inaction—by the policy brass of lawmakers and presidential administrations."
The new report highlights "two troubling examples of this chain of influence: The Competitive Enterprise Institute, or CEI, received $21 million in charitable contributions from 2020 to 2022; it bills itself as 'instrumental' both in blocking ratification of the 1997 Kyoto Protocol and in pressuring former President [Donald] Trump to withdraw from the 2016 Paris agreement."
"And the Heritage Foundation received $236 million in contributions over the same three years; this money allowed Heritage to write Project 2025, a policy blueprint overseen by several former Trump administration appointees, that proposes changes to the Department of Energy and the Environmental Protection Agency that would be disastrous for our climate," the report adds.
IPS and CARP estimate that donors to the two right-wing organizations were able to deduct "much of" their $257 million in gifts—effectively receiving major public subsidies.
"We are calling for fundamental transparency reforms so we can assess the total amount of taxpayer-subsidized charitable donations flowing to climate disinformation organizations."
In total, the report counts 137 "climate disinformation" nonprofits that received charitable donations between 2020 and 2022, with six of them focused "largely or entirely" on climate issues. The 137 organizations collectively received $5.8 billion in contributions over the three-year period examined in the analysis, which estimates that the total sum the nonprofits spent on climate disinformation "could range anywhere from a conservative $219 million into the billions of dollars."
The three "climate disinformation charities" that held the most in assets in 2022, according to the new report, were the Charles Koch Institute, the Heritage Foundation, and the Seminar Network.
Between 2020 and 2022, the climate disinformation groups that received the most in total contributions were the Seminar Network, the Stand Together Foundation, and the 85 Fund—an organization connected to Federalist Society co-chair Leonard Leo.
Chuck Collins, director of IPS' Program on Inequality and a co-author of the report, said in a statement that the analysis "provides some much-needed transparency so that the American public can understand the deceptive ways in which the rich seek to advance and protect their interests."
"Based on our findings from the data sources available to us, we are calling for fundamental transparency reforms so we can assess the total amount of taxpayer-subsidized charitable donations flowing to climate disinformation organizations," said Collins. "Many of these donors have built their fortunes in energy or the banking, insurance, transportation, and legal businesses that support the carbon-intensive industries, so they have strong personal interests in ensuring the world's dependence on fossil fuels."
The report notes that wealthy donors have recently been funneling billions of dollars into so-called donor-advised funds (DAFs), which IPS and CARP describe as a kind of "charitable bank account: a donor can donate to a personalized fund managed by a sponsoring nonprofit organization, and take a charitable deduction for that donation right away, but the donor then retains advisory privileges that let them recommend grants out of the fund to whichever charities they want, on whatever timeline they want."
IPS and CARP found that the three largest sponsors of DAFs between 2020 and 2022 were the National Philanthropic Trust, the Schwab Charitable Fund, and DonorsTrust.
"Because DAFs have a near-complete lack of donor and grantee reporting requirements, they allow for a high level of secrecy in donating funds," the report observes.
Private foundations are also major funders of climate disinformation, according to the new report, which lists the Sarah Scaife Foundation, Searle Freedom Trust, and the Lynde and Harry Bradley Foundation, among others.
The report outlines a number of potential policy changes to stem the ability of individuals and organizations with fossil fuel ties to secretively finance climate disinformation with the help of taxpayer subsidies, including barring private foundations from "using grants to donor-advised funds to meet their payout requirements" and requiring DAF sponsors to disclose "the names of all individual donors who have contributed $10,000 or more to each DAF account."
"It is high time for the American public to understand just how much charitable money is funding climate change disinformation and to recognize the key individuals behind this effort," the analysis says.
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World Bank Confirms Reallocating Fossil Fuel, Factory Farm Subsidies Key to Solving Climate Crisis
"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," said one official.
Jun 15, 2023
The World Bank on Thursday reached a conclusion that progressives have been shouting from the rooftops for decades: If governments redirected the trillions of dollars they spend annually to prop up fossil fuels as well as industrial agriculture and commercial fisheries, humanity would be in a much better position to address the climate crisis and other life-threatening global issues.
"People say that there isn't money for climate but there is—it's just in the wrong places," Axel van Trotsenburg, senior managing director of the World Bank, said in a statement. "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."
According to the bank's newly published report, Detox Development: Repurposing Environmentally Harmful Subsidies, governments around the world collectively spend at least $7.25 trillion each year—roughly 8% of global gross domestic product—to sustain the socially and ecologically damaging fossil fuel industry along with often destructive forms of farming and fishing.
Notably, the world needs to invest trillions of dollars each year in climate change mitigation, adaptation, and compensation, from ramping up clean energy production to strengthening the capacity of communities to withstand and recover from extreme weather. As van Trotsenburg suggested in a blog post, vast sums of public money to do just that are "hiding in plain sight."
"Repurposing subsidies literally saves lives."
Some of the annual support for fossil fuels, farming, and fishing comes in the form of more than $1.25 trillion in explicit subsidies, or direct government expenditures.
The report notes that governments provided $577 billion in 2021 to "artificially lower the price" of planet-heating coal, oil, and gas. That's nearly six times as much as the $100 billion of financing wealthy countries pledged to mobilize annually for climate action in impoverished nations starting in 2020—a promise that has yet to be delivered.
"By underpricing fossil fuels, governments not only incentivize overuse, but also perpetuate inefficient polluting technologies and entrench inequality," states the report. "Of all subsidies to the energy sector, about three-quarters go to fossil fuels."
Explicit subsidies for agriculture are estimated to exceed $635 billion per year. Over 60% of this amount "is in the form of coupled support, which distorts producers' decisions and leads to harmful environmental and economic impacts," the report laments.
Explicit subsidies for fisheries are estimated to exceed $35 billion per year. According to the report, $22 billion of this constitutes "harmful subsidies that can lead to overcapacity and overfishing—often in international waters or the exclusive economic zones (EEZs) of low-income coastal countries."
The problem is much larger than explicit subsidies, however. The report estimates that implicit subsidies for fossil fuels, farming, and fishing range from $6 trillion to $10.8 trillion per year. These are the indirect costs attributable to the three heavily subsidized sectors and the havoc they wreak on the health of the world's air, land, and oceans and by extension, its people.
Implicit subsidies for fossil fuels amounted to an estimated $5.4 trillion in 2020. This includes "impacts from local air pollution, greenhouse gas emissions, road congestion, and forgone tax revenues," notes the report.
Estimates of the annual value of implicit subsidies for agriculture vary. At the low end, the report says they could amount to anywhere from $548 billion to $1.1 trillion in damage caused by greenhouse gas emissions. Citing a study that takes into account the costs of greenhouse gas emissions (which those researchers put at $1.5 trillion), land degradation and biodiversity loss ($1.7 trillion), and pollution, pesticides, and antimicrobial resistance ($2.1 trillion), the report finds they could be as high as $5.3 trillion.
As the report explains:
Subsidies incentivize excessive fertilizer usage to the extent that it suppresses agricultural productivity, degrades soils and waterways, and damages people's health. More than half of global agricultural production now occurs in regions where fertilizer is suppressing rather than increasing productivity. This means there is significant room to reduce fertilizer use with positive impacts on crop production. Yet the opposite is achieved by subsidies, as excessive fertilizer application is not absorbed by crops and runs off into waterways. Inefficient subsidy usage is responsible for up to 17% of all nitrogen pollution in water in the past 30 years, which has large enough health impacts to reduce labor productivity by up to 3.5%.
Agricultural subsidies are responsible for the loss of 2.2 million hectares of forest per year, equivalent to 14% of global deforestation. Agricultural subsidies in rich countries are driving significant tropical deforestation around the world. For instance, livestock subsidies in the United States drive deforestation in Brazil by increasing the demand for soybeans as feedstock. In turn, subsidy-driven deforestation causes the spread of vector-transmitted diseases—including 3.8 million additional cases of malaria each year, with an economic impact of up to $19 billion per year.
"For fisheries, the largest implicit subsidy is the lack of regulations to prevent overfishing," states the report. "Estimates suggest that the lack of regulations results in lost economic benefits of $83 billion per year."
As van Trotsenburg pointed out in his blog post: "It's not just about the money. Ending these colossal subsidies would also be good for people and the planet."
"The burning of oil, gas, and coal causes 7 million premature deaths each year around the world through the toxic air that people breathe—a striking figure when you consider that it is roughly the same as the number of people who have died from Covid-19," he wrote, citing the World Health Organization's 6.9 million tally. "That burden falls mostly on the poor. Repurposing subsidies literally saves lives."
"People say that there isn't money for climate but there is—it's just in the wrong places."
Richard Damania, chief economist of the Sustainable Development Practice Group at the World Bank, said that "with foresight and planning, repurposing subsidies can provide more resources to give people a better quality of life and to ensure a better future for our planet."
"Much is already known about best practices for subsidy reform," Damania added, "but implementing these practices is no easy feat due to entrenched interests, challenging political dynamics, and other barriers."
With the window for climate action rapidly closing amid a mounting debt crisis in the Global South, the World Bank stressed that "repurposing... wasteful subsidies will help ensure a green and just transition that can provide jobs and opportunities for all."
For subsidy reform to be successful, "governments must compensate the most vulnerable groups through social assistance programs, like cash transfers," the bank said. In addition, policymakers should:
- Build public acceptance through transparent communication;
- Give people and businesses time to adjust; and
- Show how freed-up revenue is being reinvested to support longer-term development.
"The world's sustainable development goals are directly undermined by the roughly $1.25 trillion in explicit subsidies paid every year to fossil fuel, agriculture, and fishery sectors," the World Bank observed. "This report documents the hidden consequences of subsidies. It shows that subsidy reform can remove distorted incentives that obstruct sustainability goals, but it also can unlock significant domestic financing to facilitate and accelerate sustainable development efforts that would have greater, wider, and more equitable benefits."
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