Discover more from Life in the 21st Century
A Funny Story About Fossil Fuels, Economics, and Politics
Life in the 21st Century is a reader-supported publication. Please become a paid subscriber.
Back long ago, when I was doing energy work, I worked with Global Green, the American affiliate of Mikhail Gorbachev's Green Cross International. Matt, who ran Global Green, asked me if I wanted to help put together an energy program and go to Johannesburg, South Africa for the 2002 United Nations Sustainability Summit. Absolutely.
Over the previous five years in California, we had successfully pushed energy efficiency and renewable energy development, but the whole project collapsed in 2001 with the electricity market created by the legislature engulfed in blackouts, corruption and fraud to the tune of some $80 billion. Per usual, no one went to jail, but in one of the last righteous electoral acts in America, Gray Davis became the first California governor recalled.
In South Africa, we advocated for jump starting the solar industry, at that point not much had been invested. Even though the transistor and modern solar photovoltaic cell (PV) were invented at Bell Labs a few years apart, the following half-century saw literally trillions of dollars go into the development and implementation of the transistor, while PV, let's say, not so much, almost none. American utilities were big against solar.
We called for a global commitment of $50 billion over ten years to get solar off the ground and onto roofs. Now, this was the absolute height of neoliberalism – global megacorporations good, all government bad. Such a solar fund would immediately be labeled as an unworkable, non-market, inefficient subsidy. So, I labored to put some numbers together on fossil fuel subsidies. It turned out to be a modern Herculean labor, basically the numbers didn't exist. Conventional economics, based on fossil fuels, as the economy itself, didn't consider anything connected with coal, oil, or natural gas to be subsidized. It was just how things worked and any economist would be happy to provide an equation as proof.
I finally was able to dig up some World Bank or IMF report from the late 90s that had one number on fossil fuel subsidies. How it had been devised, I didn't care. It was a number put out by a recognized global institution, literally the only one. At the UN Summit, some corporate funded watchdog challenged our number. I emailed them the report, replying, “Talk to the IMF.”
A half-dozen years later, I was working on another project for Matt and had one of his staff look to find fossil fuel subsidies. I told her it wouldn't be easy. She came back frustrated. She had recently graduated from a prestigious California university's energy program and called the guy running it in desperation. He told her, I kid you not, “There were no fossil fuel subsidies.” After all, ironically enough, fossil fuels are modernity.
Now, the punchline: the IMF just released a report saying fossil fuel subsidies totaled $7 trillion in 2022 – funny, funny stuff, call it climate correctness reaching economic heights. Honestly, if you're going to say $7 trillion, you might as well say there's none, because in the end, the better way to look at is it's how things are done, change will only come by doing things differently.
So, in that respect, the reports not very helpful, written in economic jargon not only largely indecipherable for the hoi polloi, but it can't mean much to economists either. The report states,
“Globally, total fossil fuel subsidies amounted to $7 trillion in 2022, equivalent to nearly 7.1 percent of global GDP. Explicit subsidies (undercharging for supply costs) account for 18 percent of the total while implicit subsidies (undercharging for environmental costs and forgone consumption taxes) account for 82 percent.”
Whatever equations used, one can be sure they don't account everything. For example, the trillions spent by the US over the passed three decades blowing up the Middle East, no doubt not included, nor the cost for the street which your house or apartment sits and your automobile rolls. The most interesting figure is this one, “Explicit subsidies have more than doubled since the previous IMF assessment, from $0.5 trillion in 2020 to $1.3 trillion in 2022.” Which, while they don't say so directly, as its certainly not presently politically correct to due so, largely comprises the money to subsidize Europe's rising fossil fuel costs due to the bloody, criminally stupid Ukraine War.
Changing established perceptions is key for effecting any political change. All established power has established ways of seeing things. Much of the time, power’s accepted ways of seeing things are no more real than your average raging internet conspiracist. Most importantly, powers that be never, ever reform away their power.
The final punchline is while our call for a $50 billion solar fund went nowhere in Johannesburg, over the next decade, the Chinese poured billions into solar to begin making it “competitive” with fossil fuels and all its subsidies. Solar today is a $200 billion a year industry. The people who blew up the Middle East and pushed the bloody Ukraine folly, now want war with China. It will be amusing to see how IMF economists account that.