According to a new study, the world spends at least $1.8tn (1.3tn annually) on subsidies that drive the annihilation and rise in global warming. This raises alarm bells that humanity is financing its own demise.
From tax breaks for beef production in Amazon to financial support for unsustainable groundwater pumps in the Middle East, billions upon billions of dollars in government spending and other subsidies are harming our environment, according to the first cross-sectoral assessment for more than a ten years.
This government support, equal to 2% of global gross domestic product, directly hinders the goals of Paris AgreementThe draft targets for reversing biodiversity losses, and the ResearchOn explicit subsidies found, effectively financing land subsidence, water pollution and deforestation using state money.
Leading experts in subsidies, the authors claim that a significant amount of $1.8tn could have been repurposed to support policies beneficial to nature and a shift to net zero. This comes amid growing political discord about the costs of decarbonising the global economic system.
The report calls upon governments to agree on a target for eliminating environmentally harmful subsidies by 2010 at the biodiversity Cop15 meeting in China. There, it is hoped, a Paris agreement for Nature will be signed. Companies are also asked to disclose any subsidies they receive as part the environmental disclosure reporting.
Christiana Figueres was the UN climate change convention’s head at the time of the Paris agreement. She welcomed the research. She stated that the subsidy programs were posing huge risks to the businesses that received them.
The world is experiencing a rapid decline in nature, and it has never been home to so little biodiversity. Subsidies that are harmful must be redirected to the protection of nature and the environment, not to financing our own extinction.
According to the report, the majority of $1.8tn is made up by the fossil fuel industry ($620bn), agriculture ($520bn), water (320bn), and forestry (155bn). It is believed that mining causes billions of dollars in damage to ecosystems each year. However, no estimate has been made.
The lack of transparency between recipients and governments means that the true figure will likely be much higher. Also, harmful subsidies have an implicit cost. An International Monetary Fund report last year found that the fossil fuel industry received subsidies worth $5.9tn in 2020. However, the vast majority of this figure is due to the hidden costs of failing make polluters pay for global warming and deaths.
Subsidy reform allows for us to improve the price signals, so that we don’t protect income in more polluting sectors, said Doug Koplow (founder of Earth Track), which monitors environmentally harmful subsidies and co-author of this report with Ronald Steenblik (OECD former special counsellor for reforming fossil fuel subsidies). It allows for cleaner and more efficient forms of energy to be introduced to the market.
A draft target under the UN biodiversity agreement for this ten years calls for $500bn in annual subsidies to be reformed. The B TeamAnd Business for NatureThese are the organizations that supported the research and have called for strengthening this. The failure to act on subsidies, which has been highlighted as a significant problem from the last decade’s targets, has prevented the world from meeting a goal for halting biodiversity loss.
Eva Zabey, executive Director of Business for Nature, stated that businesses are often unaware of the extent to which they receive implicit and explicit subsidies, but could use their influence for change.
These subsidies are being used to benefit many businesses. This is not a taboo subject. She said that we need to use facts and understand the financial flows. The subsidies were usually established with good intentions. We must level the playing fields. Some are currently benefiting from a competitive advantage when it should be the opposite. It’s a terrible problem.
A UN report last year found that almost 90% of the subsidies given to farmers each year were harmful, causing peoples health, fuelling climate crisis, and driving inequality by excluding smallholder farms.
Elizabeth Mrema is the UN’s head of biodiversity. She said that the report was critical.
She stated that redirecting, repurposing or eliminating subsidies could be an important contribution to unlocking $711bn each year to halt the loss of nature by 2030 and the cost of reaching net zero emission.
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