Global fossil fuel subsidies amounted to around $6 trillion in 2020, the International Monetary Fund (IMF) chief said.
The amount was 6.8% of global gross domestic product (GDP), Kristalina Georgieva said at the UN High-Level Dialogue on Energy on Friday.
“The science is clear. Without dramatic reductions in the use of fossil fuels, we will see untold destruction to our environment and continuing damage to people’s health and livelihoods,” she warned.
Georgieva said global carbon emissions would fall by one-third, in line with keeping global warming to 1.5 degrees Celsius, if fossil fuel prices increase to fully reflect environmental and supply costs by 2025.
“Getting fossil fuel prices right is key to make these reductions. The right prices must fully reflect both supply costs and environmental costs – especially carbon emissions and local air pollution,” she said.
Georgieva added that if price increase in fossil fuels would reflect environmental and supply costs, which she called “very challenging,” additional revenues would rise by nearly 4% of global GDP, and this could be used to boost green investment and social spending.
She said the IMF has proposed an international carbon price floor among large emitters based on development levels, which would help determine the right price of fuel.