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17 February, 2022

Spending on subsidies that damage the environment stands at $1.8trn a year

According to research from the B Team and Business for Nature, money is flowing to environmentally harmful subsidies across multiple sectors, from agriculture to fishing.

By Marina Leiva

The world is spending at least $1.8trn every year, equivalent to 2% of global GDP, on subsidies that are driving the destruction of ecosystems and species extinction, according to new research commissioned by non-profit the B Team and supported by environmental coalition Business for Nature.

The report finds that the fossil fuel, agriculture and water industries receive more than 80% of all environmentally harmful subsidies per year, and that this “depletes natural resources, degrades global ecosystems, and perpetuates unsustainable levels of production and consumption, in addition to exacerbating global inequalities”.

With the UN Convention on Biological Diversity COP15 Open Ended Working Group meeting in Geneva in March 2022, the B Team and Business for Nature are calling for the $500bn-a-year target on subsidy reform in the current draft Global Biodiversity Framework to be “strengthened to reflect the latest research and commit governments to redirecting, repurposing or eliminating all environmentally harmful subsidies by 2030”.

Christiana Figueres, former executive secretary of the UN Framework Convention on Climate Change and a leader at the B Team, said: “Nature is declining at an alarming rate, and we have never lived on a planet with such little biodiversity. At least $1.8trn is funding the destruction of nature and changing our climate, while creating huge risks for the very businesses who are receiving the subsidies.

“In the meantime, we still have not met the Paris Agreement climate finance target of $100bn per year. Harmful subsidies must be redirected towards protecting the climate and nature, rather than financing our own extinction.”

​​The study provides a breakdown of environmentally harmful subsidies across the global economy. This includes areas such as agriculture, construction, forestry, fossil fuels, marine capture fisheries, transport and water. 

These sectors, the reports points out, are already responsible for the majority of global greenhouse gas (GHG) emissions. “It links subsidies, provided by public money, to impacts on the environment, global inequalities and climate,” reads the press release.

Environmentally harmful subsidies are spread in the following manner, according to the research:

  • $640bn of support a year is received by the fossil fuel industry, contributing to climate change, air and water pollution, and land subsidence.
  • $520bn of subsidies a year finances the agriculture industry. The environmental damage of unsustainable agricultural activities includes soil erosion, water pollution, commodity-driven deforestation, GHG emissions, conversion of natural habitats and consequent biodiversity loss.
  • $350bn a year flows to the unsustainable use of freshwater and the management of water and wastewater infrastructure, contributing to water pollution and risks to ecosystems in waterways and the ocean.

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