OREANDA-NEWS. National governments subsidised global energy use to the tune of nearly \$5 trillion in 2013, or around 6.5pc of global GDP, the IMF said.

The IMF's study, released on 18 May, examined the scale of consumer subsidies using a post-tax definition. This means the \$5 trillion takes into account knock-on effects from the subsidisation of fossil fuels, such as increased healthcare and environmental costs.

The IMF found that large post-tax subsidies exist in both developed and developing countries, with advanced economies accounting for around a quarter of global post-tax subsidies, at around \$1.1 trillion.

But the biggest impact is felt in the developing world, with emerging and developing countries in Asia, which includes China, providing around \$2.3 trillion a year in subsidies alone.

As a percentage of GDP, CIS countries spend the highest proportion of their GDP on fuel subsidies, at nearly 17pc. Emerging and developing countries in Asia spend around 16pc, while countries in the Middle East, North Africa and Pakistan spend around 13.5pc of GDP.

In terms of energy sources, coal accounted for the highest proportion of subsidies because of its high levels of environmental damage and because its consumption is rarely taxed. Around \$2.5trillion was spent annually subsidising the use of coal in 2013, the IMF said.

Petroleum was the second-most subsidised energy source, with around \$1.6bn of subsidies, mostly in advanced economies. Natural gas received subsidies of around \$500bn, while electricity subsidies were at around \$233bn in 2013.

The IMF argues that the abolition of global fuel subsidies could be hugely beneficial to many countries, boosting government revenues by \$2.9 trillion, cutting CO2 emissions by over 20pc and halving the number of deaths attributed to air pollution.

With the world now benefiting from low energy prices, there is a window of opportunity to reduce subsidies and raise energy taxes, as opposition to reform is likely to be relatively calm, the report said.

Most of the environmental damage that results from a country's fossil fuel subsidies takes place within its own borders, the IMF said.