Climate change doesn't just present an environmental threat to human populations, it also has a tangible economic impact.

Governments must invest in measures to combat climate change, and deal with its effects as well as the general consequences of societies that depend on the combustion of fossil fuels to run their economies.

So how much does all of that cost?

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When costs imposed on all levels of government by emissions of carbon dioxide (CO2) and other pollutants are included, fossil fuels benefit from global subsidies of $5.3 trillion a year, according to the International Monetary Fund (IMF).

It called that figure--which is equivalent of $10 million spent every minute--"shocking," The Guardian reports.

That calculated sum comes mostly from companies not paying the costs imposed on governments by the burning of oil, coal, and natural gas, the paper says.

Two BNSF locomotives hauling coal trains meet near Wichita Falls, Texas

Two BNSF locomotives hauling coal trains meet near Wichita Falls, Texas

Those costs include harm caused by air pollution as well as the costs of responding to disasters--like droughts or multiple "100-year" floods in a decade--that can be tied to climate change.

The IMF says the costs of dealing with climate change caused by CO2 emissions account for subsidies of $1.27 trillion a year.

This was calculated using a U.S. government estimate of $42 per tonne of CO2 emissions that was called conservative by the U.N. Intergovernmental Panel on Climate Change.

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The IMF said that ending fossil-fuel subsidies would cut global greenhouse-gas emissions by 20 percent, and that the resources freed up could constitute an "economic game changer" for some countries.

And if fossil-fuel subsidies were abolished, there would be no need to subsidize renewable energy--which receives a comparatively small $120 billion globally per year, the IMF says.

Renewable sources would become cost-competitive with fossil fuels if the latter were priced to reflect the total costs to society of their impact, the IMF reasons.

Coal, by Flicker user oatsy40 (Used Under CC License)

Coal, by Flicker user oatsy40 (Used Under CC License)

Coal is the dirtiest fuel in terms of both local air pollution and greenhouse-gas emissions, and consequently it received the largest share of such subsidies--just over half the total.

About one third of the subsidy total went to oil, with the rest to natural gas.

China was the largest contributor to such subsidies, accounting for $2.3 trillion of the $5.3 trillion cost to society of burning fossil fuels.

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It was followed by the U.S. ($700 billion), Russia ($335 billion), India ($277 billion), and Japan ($157 billion). The European Union nations collectively account for $330 billion of the total.

Direct subsidies for consumers in form of government-funded discounts on gasoline and diesel fuel account for 6 percent of the total.

Other "local factors," such as reduced sales taxes, and the cost of traffic congestion and crashes, made up the rest.

Natural gas flaring from oil well [licensed under Creative Commons from Flickr user Sirdle]

Natural gas flaring from oil well [licensed under Creative Commons from Flickr user Sirdle]

The G-20 nations agreed in principle to phase out fossil-fuel subsidies in 2013, but little action has been taken on an international level to reach that goal.

However, several countries including Egypt, Indonesia, Mexico, Morocco, and Thailand are reportedly working on subsidy reform.

India ended subsidies for diesel fuel in October 2014, and coal use has begun to fall in China for the first time in a century.

That individualized approach could actually prove more effective, according to IMF head of fiscal affairs Vitor Gaspar.

He said the benefits of reducing pollution mean that cutting fossil-fuel subsidies is in the best interests of a country's economy.

"The path forward is clear: act local, solve global," he said.

[hat tip: Eric Leclair]


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