UN says the world spends $423 billion annually to subsidize fossil fuel

Countries globally spend $423 billion of taxpayers money on subsidizing fossil fuel use every year.

Achim Steiner, head of the United Nations Development Programme disclosed this to CNBC.

Steiner said that spending $423 billion a year on fossil fuel subsidies, which is often justified to ensure energy is cheaper for poorer people, is not an effective use of taxpayers’ money.

What the UN is saying

According to Steiner who was speaking around the launch of its new campaign, “Don’t Choose Extinction,” said spending $423 billion a year on fossil fuel subsidies is a waste of government money.

Steiner said, “There is an element of humour and adventure in there, but it is to carry a very vital message to a very broad audience. It is meant to interest young people, old people, people who think that they have nothing to do with this and yet they are part of that fossil fuel economy that is taking us to the brink of a point of no return also in terms of climate change.

So, if you’re interested in helping poorer people to have access to energy, to fuel, there are much more efficient ways of doing that and you don’t need to distort an entire economy in terms of the way we currently make fossil fuels artificially cheaper to use,” he added.

Nigeria’s subsidy

Nigeria, Africa’s top oil producer, has spent about $294 million monthly on fuel subsidies, according to Bloomberg.

Although the Federal Government announced the termination of the fuel subsidy system in April 2020, when the downstream sector of the petroleum industry underwent full deregulation.

The federal government halted its implementation earlier this year to allow for extensive consultation with stakeholders and organized labour.

Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr Mele Kyari, told the lawmakers that although no provision was made for fuel subsidy in 2021, the government is presently consulting with relevant stakeholders to exit the subsidy regime.

The NNPC boss, however, stated that the process may not be concluded anytime soon, hence the need to reintroduce subsidy in the 2022 budget.

Source: NairaMetrics

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