According to the International Monetary Fund, in 2022 direct subsidies for the fossil fuel industry rose to US$1.3 trillion. In previous years, the industry averaged profits of $1.5 trillion, but last year their global profits were $4 trillion, per the International Energy Agency. Also last year, global greenhouse gas emissions, mostly from burning fossil fuels, went up by almost a percent, also per the IEA.

Why, in a year when the industry was making record profits were governments giving them even more money? After all, the governments are expected to work on behalf of their citizens, and the IMF pegs the industry's indirect subsidies due to the strong negative impacts of pollution and climate change at $5.7 trillion, 6% of the world's gross domestic product.

In 2009 the G20 committed to ending subsidies for fossil fuels. Since then global subsidies have increased, along with emissions. This governmental largesse for the fossil fuel industry is a primary source of its profits, and a primary cause of continued greenhouse gas emissions.

These countries subsidizing fossil fuels are all signatory to the Paris Accord. They've all committed to addressing climate change and working toward the 1.5° Celsius warming aspirational target, and the firmer 2° Celsius of heating number. And yet, here we are.

Clearly it would save governments money to stop throwing it at the fossil fuel industry. It would be easier to balance budgets and reduce deficits if they weren't funding the industry's bottom line. There would be more money for things like housing, economic diversification and climate action.

And, clearly, it would be easier to reduce greenhouse gas emissions if the fossil fuel industry had to make profits the way most industries do, by charging their customers more for their products. Higher cost products get purchased a bit less. Subsidizing fossil fuels means cheaper fossil fuels for end users, and so they use more of them than they would otherwise. They might otherwise invest in efficiency, for example.

As noted elsewhere in this series on the short list of climate actions that will work, including the cost of those negative externalities of fossil fuels into their prices is also of value. But for this, let's just focus on the direct subsidies.

Lobbying explains a lot of the problem. The industry has deep pockets, in part due to all of the governmental money weighing them down, and they are happy to spend it on expensive and ethically compromised lobbyists in Washington, Westminster and similar places.

A long history of governmental program capture by industry resources who cycled through the bureaucracies and back again, adding line items and extras and programs favoring the industry is a big part of the problem. When the Canadian government, which unlike the US government actually managed to reduce subsidies somewhat for a few years, attempted to eliminate them, they were defeated in part by how many thousands of little slices were going to the industry in every program remotely related to energy and economic development.

Of course, a lot of citizens love the subsidies that benefit them, even if they dislike subsidies and agree that they must be stopped. The cheaper, colored diesel that farmers get for their tractors is hard to take away. The barely taxed aviation fuel that helps keep flying away for sunny vacations inexpensive is difficult to eliminate, although that's finally starting to occur.

The hardly taxed natural gas that homeowners burn wastefully in poorly insulated homes is difficult to price appropriately due to voters' outrage, even as clean electricity is heavily taxed in so many jurisdictions, making heat pumps a hard sell.

The USA's hydrogen strategy is a barely disguised subsidy for the fossil fuel industry. The Congressional act which ordered the Department of Energy to create it makes that clear as the first two listed sources of hydrogen were natural gas and coal, that hydrogen efforts were mandated to be focused in shale oil and gas regions of the country and the strategy was required to preserve fossil fuel industry infrastructure assets. That's part of why there's so much money flowing to carbon capture and storage projects in the USA, more money that the industry isn't bothering to spend out of its profits.

Economic development programs, research and business startup programs are full of ways for the industry to take more slices of the taxpayers' pie. In the USA, there are many tax credits in the permanent tax code — unlike those for low-carbon, low-pollution, highly virtuous renewables which are clinging to the cheap seats of the temporary tax code — that fund the profits of new oil and gas project development, even as the oil and gas we already have in proven and developed projects is far more than we can burn and still meet climate targets.

Recently the G20 met again. These countries are responsible for most of the direct fossil fuel subsidies and most of the greenhouse gas emissions in the world, both historically and currently. They recommitted to their now 14-year old goal to end subsidies, without making it clear why this promise is different.

Record profits. Record subsidies. Record greenhouse gas emissions. Eliminating subsidies is hard, but must be done, for human health, the climate and the economy.

As a reminder, here's the short list of climate actions that will work:

  • Electrify everything
  • Overbuild renewable generation
  • Build continent-scale electrical grids and markets
  • Build pumped hydro and other storage
  • Plant a lot of trees
  • Change agricultural practices
  • Fix concrete, steel and industrial processes
  • Price carbon aggressively
  • Shut down coal and gas generation aggressively
  • Stop financing and subsidies for fossil fuel
  • Eliminate HFCs in refrigeration
  • Ignore distractions
  • Pay attention to motivations