The world is spending about $1.8 trillion every year on subsidies driving the annihilation of wildlife and a rise in global heating, says a new study. It highlighted that humanity is financing its own extinction.
Billions of dollars of government spending, from tax breaks for beef production in the Amazon to financial support for unsustainable groundwater pumping in the Middle East, and other subsidies are harming the environment.
The study pointed out that government support, equivalent to 2% of the global GDP is directly working against the goals of the Paris agreement. The research on explicit subsidies found effectively financing water pollution, land subsidence and deforestation with state money.
The report revealed that the fossil fuel industry ($620 billion), the agricultural sector ($520 billion), water ($320 billion) and forestry ($155 billion) account for the majority of the $1.8 trillion. It stated that lack of transparency between governments and recipients means the true figure is likely to be much higher, as is the implicit cost of harmful subsidies.
Experts believe a significant portion of the $1.8 trillion could be repurposed to support policies that are beneficial for nature and a transition to net zero, amid growing political division about the cost of decarbonizing the global economy. The report urges governments to agree a target to eradicate environmentally harmful subsidies by the end of the decade at the biodiversity Cop15 gathering in China later this year.
Christiana Figueres, who led the UN climate change convention when the Paris agreement was signed, said the subsidies were creating huge risks for the businesses receiving them. “Nature is declining at an alarming rate, and we have never lived on a planet with a so little biodiversity,” she said. “Harmful subsidies must be redirected towards protecting the climate and nature, rather than financing our own extinction.”
Doug Koplow, founder of Earth Track – an organization that monitors environmentally harmful subsidies, highlighted that subsidy reform allows to improve the price signals so governments are not protecting income in more polluting industries. He said it creates space for alternative and clearner forms of energy to enter the marketplace.
However, Eva Zabey – the executive director of Business for Nature, says businesses were often unaware of the extent of explicit and implicit subsidies they benefit from. They can use their influence to call for change. “Many businesses are benefiting from these environmentally harmful subsidies. This cannot be a taboo topic. We need to speak using facts and understand where the financial flows are going,” she said. “Typically, the subsidies were established with good intentions in mind. We need to level the playing field because right now, some are benefiting from a head start when it should be the other way round.”
Zabey said its a wicked problem.