IMF Agrees With Obama: End Fossil Fuel Subsidies, Tax Carbon

Photo Credit: infomatique

The International Monetary Fund on Wednesday promoted ending fossil fuel subsidies and taxing carbon emissions to discourage excessive energy consumption and combat climate change.

“The link between subsidies, consumption of energy and climate change has added a new dimension to the debate on energy subsides,” David Lipton, IMF first deputy managing director, said in prepared remarks at a Washington event hosted by the Peterson Institute for International Economics.

President Obama’s political goals include stripping back those subsidies. The White House and congressional Democrats want to remove about $4 billion in annual tax provisions awarded to the oil-and-gas industry.

Oil-and-gas interests, and their Republican allies, say the provisions are cost-recovery mechanisms and business deductions that other industries also claim.

In 2011, nations doled out roughly $480 billion of “pre-tax” incentives, which are “when consumers pay less than supply cost of energy,” Lipton explained. They are generally found in emerging economies, according to an IMF report released Wednesday.

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