In Serbia, subsidies for fossil fuels exceeded 11 billion dollars in 2022, according to estimates from the International Monetary Fund (IMF).
Of this amount, as stated by Ivana Ostojić from the Institute of Social Sciences, 2.6 billion dollars were explicit subsidies (primarily for electricity and natural gas), while the majority of the total, a staggering seven billion, represented the cost of coal use through so-called implicit subsidies.
“The cost arises indirectly, primarily through damages caused by air pollution and the consequences of climate change,” stated Ostojić in an article published on the Klima 101 portal.
Globally, according to the IMF, subsidies for fossil fuels were around 7 trillion dollars in 2022, with the majority comprising damages to human health and the environment.
As mentioned, only 18 percent of the amount represents subsidies in the form of government spending on fossil fuels, while almost 60 percent represents damages to human health and the environment caused by the combustion of fossil fuels.
According to the IMF’s estimate, coal and oil, as the major pollutants, cost the global economy three percent of the GDP annually through these indirect costs.
In Serbia, as cited by Ostojić, relying on IMF estimates, 2.6 billion dollars were allocated for fossil fuels through state subsidies in 2022, exclusively in the consumption of fossil energy.
“However, the total cost of fossil fuels is much higher: out of a total of 8.6 billion dollars in so-called implicit subsidies, the cost of our coal use is estimated at a staggering seven billion. Coal is undoubtedly the dominant cost of our society for the use of fossil fuels,” emphasized Ostojić.
Ostojić states that, as mentioned in the Air Protection Program adopted by Serbia at the end of 2022, air pollution causes more than 10,000 premature deaths, over 22,000 cases of bronchitis in children, more than two million days of work disability, and over 6,000 additional hospital admissions solely due to respiratory issues. These figures specifically refer to pollution from PM 2.5 particles and nitrogen oxide.
Furthermore, it is noted that Serbia is in one of the global “hot spots” where warming due to climate change is more intense than the world average. Serbia is currently on average 1.8 degrees Celsius warmer than in the pre-industrial era, with summers being as much as 2.6 degrees warmer, according to Ostojić. She adds that the consequence of such warming includes an increased frequency of extreme events such as droughts or floods.
Ostojić warns that the assessment of damage from climate change in Serbia has long exceeded seven billion dollars, and it is expected that this amount will continue to grow “as long as we feel the consequences of greenhouse gas emissions.”
She emphasizes that the abandonment of fossil fuels has become an important international issue with various political and economic consequences. Additionally, fossil fuels are a non-renewable source of energy that will not be available indefinitely.
“In other words, the cost of the status quo, which is already enormous, will become even greater in the future. Replacing fossil fuels therefore has no alternative; it is only a matter of when it will happen and whether it will be regulated and fair. These are questions that only the state can answer,” concludes Ostojić, as reported by Klima 101.
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