On 11 October, the World Bank held its annual meeting in Morocco. This international financial institution that provides loans, especially to developing countries, has got a new president, Ajay Banga, who previously managed Mastercard, one of the largest cashless payment operators.

Banga questioned the huge amount of money governments spend on subsidising fossil fuels. Speaking at the meeting, he said the $1.25 trillion spent each year to reduce the price of fuel, fisheries and agriculture in developed countries is too much.

The three sectors most heavily subsidised by governments are responsible for environmental costs of $6 trillion a year. The World Bank wants the funds to be redirected towards addressing climate catastrophe.

According to a 2021 report by the International Monetary Fund, governments around the world spend almost €0.5 trillion a year to reduce the price of fossil fuels for domestic consumers. These subsidies take various forms, including tax breaks, low-interest loans or petrol price caps.

In its own "Detox Development" report from June 2023, the World Bank notes that if the social costs of fossil fuels - such as the impact on climate change and air pollution - were taken into account, their real price would be even higher than the free market price, Euronews reports. Getting rid of fossil fuel subsidies would also make renewables more competitive.

Stopping fossil fuel subsidies is politically difficult. This is well illustrated by situation in Poland where the government maintains unprofitable coal mines and imports the missing raw material from Russia for the sake of voters linked to industries involved in burning it.

Source: euronews.com