The IMF’s Fantasy Economics of Fossil Fuels
The International Monetary Fund, in its infinite wisdom and celestial detachment from reality, has once again graced humanity with revelation. In a 2019 report (about 2017 data), they declared that the world spent 5.2 trillion U.S. dollars subsidizing fossil fuels. Trillion. With a “T.” The United States, those notorious oil-guzzling heretics, supposedly contributed a generous 649 billion of that total—more than its already swollen defense budget.
These figures were immediately paraded through the global media like a drunken prophet through the marketplace—blaring trumpets, no questions, no verifications, no adult supervision. Journalists, policymakers, and self-anointed saviors of the planet all nodded solemnly as if someone had handed them the Ten Commandments. Overnight, outrageous assumptions turned into “facts.” No one checked. Nobody even blinked. The IMF had spoken, and the world, ever eager to outsource thought, believed.
So let’s do something truly subversive: look inside.
Counting Phantoms
To begin, the U.S. isn’t even the champion in this strange contest. That honor, predictably, goes to China—though since China isn’t considered a “developed economy,” it’s treated like a naughty child rather than a responsible adult. Convenient.
Now, when we hear the word subsidy, most of us picture the government writing actual checks. Money flowing from the public purse to oil companies, or to consumers at the gas pump. Real, tangible cash. But the IMF’s report, like most bureaucratic art, is not bound by such crude realism.
The Fund identifies three sacred categories of subsidy:
- Direct payments to producers or consumers. (Fine. That’s at least real money.)
- Undercharging for taxes—meaning foregone revenue, preferential tax treatment, and assorted creative accounting. (A stretch, but we can at least keep a straight face.)
- Failure to charge for externalities—the supposed costs of local pollution, climate change, and assorted environmental sins.
And it’s this third category, the great cathedral of “negative externalities,” that swells the numbers into the stratosphere.
The Gospel of Externalities
An externality, in economic scripture, is a side effect—a consequence of human activity not directly priced by the market. It’s a real concept, yes, but also a splendid playground for moral crusaders. Assigning a price to something that doesn’t have one is an act of creative faith. It’s like putting a dollar figure on a broken heart or a ruined childhood. You can do it, but the exercise tells you more about the accountant than about reality.
Every externality calculation begins with an assumption, and assumptions—let’s be frank—are where economists go to play God. You can assign a “cost” to anything: the psychological trauma of seeing a smokestack, the hypothetical decline in happiness among fish, the grief of future generations who never got to see a glacier. The possibilities are endless.
That’s why, in a sane world, such exercises come wrapped in disclaimers the size of billboards. “Warning: what follows is speculative fiction.” But no—when the IMF does it, the disclaimers vanish, the assumptions harden into data, and the estimates become Gospel Truth.
Let’s remind ourselves: one verifiable fact to the contrary can turn an entire edifice of assumption into garbage. That’s how fragile this intellectual soufflé really is.
A Case Study in Absurdity
Take a railway station. Its intended function is to let passengers board and un-board trains. Simple enough. But it also provides, unintentionally, shelter to the homeless on cold nights. From their perspective, that’s a positive externality. From the perspective of the commuters stepping over bodies to catch the 7:40, it’s decidedly negative. Add in the cost of extra cleaning, police patrols, and the unmistakable bouquet of human suffering, and you have a tidy little case study in externalities.
Now transport that logic to the world of fossil fuels.
Burning coal, oil, and gas allows us to move ourselves and our goods efficiently. It gives us heating, light, and the miracle of electricity. It has raised billions from squalor and given the rest of us the comfort to complain about it online. Modern civilization, every flickering pixel of it, rests upon the carbon backbone.
According to the World Bank, global GDP in 2017 was just over 80 trillion dollars. Without fossil fuels, it would be lucky to break into double digits. Picture life without them: agriculture collapsing to medieval yields, supply chains dying like flies, refrigeration disappearing, cities turning into death traps. Imagine the Amish—but without the cheerful marketing brochure. That’s what “zero fossil fuel” really looks like.
So yes, fossil fuels produce unwanted byproducts—polluted air, dirty water, occasional premature death. Cities like Beijing, Delhi, and Lagos wear that truth visibly, choking under it. But even there, one must notice: the problem is overwhelmingly local, not planetary. And developed countries have largely cleaned it up with strict regulations. Paris in summer may smell of exhaust, but it is not choking to death.
These negative externalities are measurable, yes, but always arguable. How much damage? To whom? Under what assumptions? These are not objective questions. They are moral judgments dressed up as mathematics.
Assumptions and Witch Hunts
Every assumption begins with good intentions—until it mutates into prejudice. During the Cold War, the United States had a real problem with Soviet spies. But once the hysteria set in, every eccentric became a potential traitor. The same logic applies here. A cautious assumption about air pollution turns into a crusade against carbon itself. Anyone questioning the orthodoxy becomes a “denier.” The witch hunts are digital now, but the pitchforks are the same.
Noise pollution? Negative externality.
Methane emissions? Negative externality.
Carbon dioxide—the molecule of life? Negative externality.
And this, finally, is where the IMF’s fantasy truly blossoms.
The Price of Thin Air
For their U.S. estimate, the IMF took the nation’s 2015 carbon emissions—5.4 billion tons—and multiplied by a made-up cost of $36 per ton. Voilà! A few keystrokes later, hundreds of billions in “subsidies” appear from nowhere.
Where did this $36 come from? Not the market, where carbon prices vary wildly from $10 to $200 depending on who’s guessing that week. No, the IMF used its own “optimal” model—meaning whatever number fit the sermon.
No mention, of course, of any positive externalities from fossil fuels. Fairness demands balance, but fairness is boring and doesn’t sell reports.
Let’s perform a back-of-the-envelope reality check. The world generates over 80 trillion dollars in GDP each year, and fossil fuels underpin at least three-quarters of it. That’s roughly 60 trillion dollars of value directly enabled by carbon. Subtract the IMF’s supposed 5 trillion in “costs,” and you still have a net positive of 55 trillion.
If that doesn’t register, imagine losing 60 trillion overnight. Agriculture collapses. Hospitals go dark. Food rots in warehouses that no longer cool. Millions die in the first year, billions soon after. Civilization, as we know it, ceases to exist. But congratulations—you’ve achieved carbon neutrality.
Welcome to the new Stone Age, brought to you by the International Monetary Fund.
The Panem Economy
Without fossil fuels, we’d return to the pre-industrial condition: muscle power and firewood. Renewable energy, that green halo of modern virtue, would belong exclusively to the wealthy—lords and technocrats with private solar farms while the rest of humanity shivers in the dark. A feudalism of energy, dressed up as progress. Panem et circenses for the few, starvation for the rest.
And yet we are told that fossil fuels’ positive externalities—the very infrastructure of civilization—don’t count. Only the sins do. It’s like calculating the value of a human being based solely on their farts.
Even if one accepts the dubious premise that CO₂ is the great Satan of the atmosphere, the story remains incomplete. Higher CO₂ levels, within reason, stimulate plant growth. They make crops more resilient, forests more abundant. There is a reason greenhouses pump CO₂ inside: plants love the stuff. The IMF’s models, naturally, ignore this. It would ruin the moral symmetry.
The Cult of Carbon Catastrophe
We have entered the realm of religious fervor. The carbon crusade operates like any medieval church: it offers indulgences (carbon credits), demands tithes (carbon taxes), and threatens apocalypse for the unrepentant. Scientists and bureaucrats serve as priesthood; the IMF merely counts the coins.
Every human act produces both good and harm. Wind turbines massacre birds and bats, emit low-frequency vibrations that drive people insane, and blight landscapes into dystopian sculpture gardens. Solar panels consume rare minerals mined by child labor and leave behind toxic waste. But no one adds those costs to the subsidy ledger.
By IMF logic, the CO₂ released to build a windmill or smelt a solar panel should count as a subsidy to renewables—a “carbon backpack,” as some engineers call it. Yet silence reigns. Consistency is fatal to ideology.
Definitions, Mangled Beyond Recognition
Let’s recall what a subsidy actually is: a tangible, targeted transfer of public money to favor one activity over another. It distorts the market, changes profit and loss, and requires justification from the taxpayer. If the state hands an oil company a check, that’s a subsidy. If it doesn’t charge some speculative “social cost of carbon,” that’s not a subsidy—that’s restraint from lunacy.
By any sane definition, solar energy in the U.S. receives more real subsidy per unit of energy than natural gas ever has. Roughly one-third higher, in fact. But you won’t find the IMF highlighting that. It would complicate the narrative of moral purity.
Instead, we get grand theater: a $5 trillion hallucination masquerading as economic analysis. It’s propaganda wearing a tie.
The Death of Definition
The tragedy isn’t just that institutions like the IMF publish such nonsense—it’s that we’ve forgotten how to think critically about it. Definitions used to mean something. Facts were supposed to be verified. Now, “truth” is whatever gets the most retweets.
We live in a world so drunk on moral signaling that even economists have turned evangelists. The very people who once prided themselves on rigor now churn out political sermons dressed as spreadsheets. Numbers are no longer tools of understanding but weapons of persuasion.
The IMF’s report isn’t about subsidies; it’s about control—framing energy use as moral guilt, to justify taxation and central management. It’s a rebranding of human necessity as sin. Every time you heat your home or drive to work, you are to feel complicit. The IMF, naturally, offers redemption through compliance.
The Final Irony
Here’s the absurdity in full bloom: the same civilization that owes its existence to carbon now condemns it with holy fury, using laptops and air conditioning to do so. The same bureaucracies that can’t balance a national budget presume to balance planetary chemistry. The same people who can’t predict next quarter’s GDP claim to predict the climate in 2100.
If hypocrisy had a carbon footprint, it would melt the ice caps tomorrow.
And yet, buried beneath the sanctimony, a simple truth persists: externalities deserve discussion. Some are real. Pollution kills, waste matters, efficiency is good. But discussion requires honesty, not ideological inflation. You don’t help the planet by lying about math.
The IMF’s “subsidy” fantasy is not analysis—it’s theater. A moral performance for the benefit of the already converted. It invites applause, not understanding. And like all theater, it ends with applause fading into darkness.
The Bottom Line
If a subsidy must be real—paid from public funds, altering profit and loss—then most of the IMF’s 5.2 trillion evaporates instantly. What remains are the usual modest energy supports that every modern nation uses to stabilize prices and prevent riots. Nothing scandalous, nothing existential.
But the myth will persist, because it serves too many agendas. Governments need moral justification for higher taxes. NGOs need perpetual outrage to survive. And media outlets need numbers big enough to shock the dopamine receptors of their readers.
Meanwhile, civilization keeps running on oil, coal, and gas—the same substances our ancestors discovered, the same ones we now ritualistically curse while depending on them for our every breath of comfort.
It’s not fossil fuels that deserve shame. It’s our intellectual cowardice—the willingness to mistake model outputs for facts, morality plays for economics, and bureaucratic posturing for truth.
In the End
The IMF’s imaginary trillions are the purest example of modern alchemy: turning moral indignation into financial data. But unlike real alchemists, these sorcerers get funded.
They tell us that burning carbon is evil, but burning credibility apparently isn’t. They inflate numbers like helium balloons, watch them drift toward headlines, and call it enlightenment. And the world, half-asleep in its virtue haze, nods along.
In the old days, we feared inquisitors. Today, we fear economists. Both claim to save the world; both make a living from guilt.
Perhaps the real externality—the one we never price—is the human tendency to believe anything said in a calm voice by someone with a logo on their report.
And that, dear reader, is the most expensive illusion of all.
