Global fossil fuel subsidies amounted to $5.2 trillion in 2017

According to a new report by the International Monetary Fund (IMF), fossil fuel subsidies worldwide reached a staggering $4.
7 trillion in 2015 and $5.
2 trillion
in 2017.
This means that 6.
5% of global GDP in 2017 was spent subsidizing fossil fuel consumption
.

The IMF said China was the "largest subsidy to date" in 2015 at $1.
4 trillion
.
The United States ranked second
with $649 billion.
In other words, the United States spent more on fossil fuel subsidies in 2015 than on the Pentagon budget ($599 billion in 2015).

Russia spent $551 billion, the EU $289 billion, and India $209 billion
.
Emerging markets in Asia accounted for 40 percent of the total, while industrialized countries accounted for 27 percent, with a smaller
share from other regions.

The subsidy data used by the IMF includes various supports
for fossil fuels.
Coal yielded the most benefits by fuel, accounting for 44% of the global total, followed by oil with 41%, natural gas and electricity production at 10% and 4%,
respectively.

The IMF said that if fuel prices were set at "fully effective levels" in 2015, global carbon dioxide emissions would be reduced by 28 percent, deaths from air pollution would be reduced by 46 percent, and tax revenues would be 3.
8 percent
of global GDP.

The problem is that government support for fossil fuels tends to be popular
.
Everyone loves cheap gasoline or cheap electricity
.
This makes it difficult to withdraw support and, in many countries, politically dangerous
.

There have been some notable changes in recent years, as the collapse in oil prices in 2014 brought oil prices down sharply, opening the window for the government to cut subsidies without public outrage
.
For oil-exporting countries, the pressure to cut spending is particularly acute
.
According to the IMF, the increase in gasoline, diesel and electricity prices in Bahrain, Egypt, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates has changed
.
In particular, Saudi Arabia raised gasoline prices by 67%
at the end of 2015.

Another type of subsidy cut takes the form of a shift to market-based pricing (i.
e.
, allowing prices to rise), which occurs in China, Côte d'Ivoire, Jordan, Madagascar, Mexico, Oman and the United Arab Emirates, India, Indonesia, Thailand and Tunisia
, the IMF said.

The problem, however, is that when global crude oil prices rebounded in 2017 and 2018, swift action was taken to put price support back in place to avoid public outrage
.
Notably, Indonesia curbed fuel prices to stop them from rising
.
In Brazil, the government lowered fuel prices
in response to a nationwide truckers' strike last year.

As the Fed has raised interest rates several times over the past two years, strengthening the dollar, thereby exerting downward pressure on emerging market currencies, the pressure to somehow set prices or subsidize fuels is even more severe
.
Since oil is denominated in dollars, a weaker currency has greatly increased the price of oil, which has caused frustration for millions
.

The IMF has called on governments around the world to cut fossil fuel subsidies, but also acknowledged that removing price support is very difficult, so fossil fuel subsidies are likely to
continue.