They’re as rich as sheiks. That’s probably because they are..Apart from being the world’s biggest oil producer (by capacity) Saudi Arabia doles out more fossil fuel subsidies than any other nation on Earth, or more than $7,000 for every man, woman and child according to a report from the International Monetary Fund (IMF)..That amounts to almost 27% of its entire gross domestic production (GDP)..And despite assertions to the contrary from politicians such as Environment Minister Steven Guilbeault, Canada‘s energy sector is actually the least subsidized in the G20 — or Earth — by any measure..According to the IMF, the world subsidized fossil fuels to the tune of $7 trillion in what it calls “direct” and “indirect” subsidies. ."Fossil fuels in most countries are priced incorrectly," the report said. "Unfortunately, current prices are routinely set at levels that do not adequately reflect environmental damages and, in some cases, do not even account for supply costs.".As the term implies, ‘direct’ subsidies are cash paid out by governments to both consumers and producers below the cost of production. ‘Indirect’ subsidies are harder to quantify because they include factors such as environmental damage, air pollution deaths, road repairs, lost taxes and even downtime due to traffic jams..Excluding those amorphous indirect costs, Saudi Arabia is still the highest at $3,579 per person. Canada’s was just $47 or 0.1% of GDP. Even after factoring the so-called indirect 'subsidies' Canada was still the lowest at 2% of GDP. .The discrepancy is because Saudi Arabia is the only G20 country — and only one of five in the world — that doesn’t tax gasoline and in fact caps the price below the cost of producing it. It was one of several countries to impose price limits or fuel tax reductions on gasoline prices after the invasion of Ukraine..On the bright side, coal use in the Kingdom is practically negligible..On a per capita basis, Russia was a distant second at $2,912 per person and Japan at $2,498..No surprise, China paid the most in absolute terms, at $2.24 trillion although $1.96 trillion of that was ‘indirect’ as opposed to ‘direct’ subsidies. But as any visitor to the Middle Kingdom can attest, that ‘indirect’ number is warranted given the air quality of Beijing on an average day..That was followed by the US at $757 billion or $2,243 per person, but that was almost exclusively the ‘indirect’ variety. In absolute terms, it paid out just $1 billion which statistically rounds out to zero..The IMF report recommends phasing out direct subsidies by 2030, which Canada has already vowed to do — because there are hardly any to begin with, even by the IMF’s definition..And to their credit, the working paper’s authors note the numbers should be taken with a healthy grain of salt..“At an analytical level, the first-pass nature of the above estimates should be borne in mind. Given the broad country coverage, there are necessarily simplifications in the approach,“ it concluded. ”Country authorities may have different perspectives on some of the assumptions and parameter values, for example the value of mortality risks.”
