Don't Choose Extinction

Source: United Nations Development Programme (UNDP)

The world spends a staggering $423 billion a year subsidising fossil fuels for consumers - oil, electricity generated by burning other fossil fuels, gas and coal. According to a new study by the United Nations Development Programme (UNDP), this is four times the amount needed to help poor countries tackle the climate crisis, one of the sticking points at the COP26 global climate conference next week.

The amount spent directly on these subsidies could pay for COVID-19 vaccines for every person in the world, or pay for three times the annual amount needed to eradicate extreme poverty in the world. When indirect costs, including environmental costs, are factored into these subsidies, the figure rises to almost $6 trillion, according to data recently released by the International Monetary Fund (IMF).

Instead, the UNDP analysis points out that these funds, paid for by taxpayers, end up widening inequalities and hampering action against climate change.

The main culprit in the climate emergency is the energy sector, which accounts for 73% of man-made greenhouse gas emissions. Reforms of fossil fuel subsidies would help reduce CO2 emissions and benefit people's health and well-being. They are a first step towards proper energy pricing that reflects the full "real" cost of fossil fuel use to society and the environment.

But the UNDP analysis shows that fossil fuel subsidy reforms can also be unfair and harmful to households and society if they are poorly designed. While fossil fuel subsidies tend to be an unequal tool - with the lion's share of the benefits going to the rich - they also represent a significant share of poor people's income that should otherwise be spent on energy use. Removing fossil fuel subsidies could therefore easily become a strategy for income and energy impoverishment. This makes fossil fuel reform difficult and is a major obstacle to the transition to clean and renewable energy sources.

The "Don't Choose Extinction" campaign uses a collective intelligence platform, the Global Mindpool, to tackle the most important issues of our time. By connecting ideas from around the world - on the climate emergency, the nature crisis and inequality - the Global Mindpool will help UNDP better inform and equip decision makers in government, civil society and the private sector.

For more information on the "Don't Choose Extinction" campaign, visit www.dontchooseextinction.com.

UNDP is the leading UN organization working to end the injustice of poverty, inequality and climate change. Working with our vast network of experts and partners in 170 countries, we help nations develop integrated and sustainable solutions for people and the planet.

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