Global fossil fuel subsidies hit $6.7 trillion in 2024. Only 11% were explicitly undercharging for supply. 89% were implicitly undercharging for biosphere damage including pollution costs. In contrast, the global renewable transition is estimated to cost around $1 trillion to $2 trillion annually, meaning subsidy redirection could fully fund the green shift.
According to research detailed in IMF Working Papers and the IMF Fossil Fuel Subsidies Data Update presented here:
- The Subsidy Breakdown: Explicit subsidies cost governments $725 billion, while the implicit subsidy burden, biosphere damage including air-land-water pollution, biodiversity destruction, climate change… totals nearly $6.7 trillion.
- Transition Costs: Shifting to a net-zero trajectory requires rapid scaling in wind, solar, other renewables… & grid infrastructure. The IMF “Fiscal Monitor” projects that annual global clean energy investments need to rise substantially.
- The Opportunity: Phasing out explicit fossil fuel subsidies would generate roughly 0.6% of global GDP in government revenue. Taxing carbon and fully pricing environmental damages would not only make renewables definitively cheaper, but also raise funds equivalent to nearly 3.6% of global GDP.