New research from 350.org shows that in addition to higher energy bills, fossil fuels cost households an additional $12 trillion annually in taxpayer benefits, health impacts and extreme weather damage — the equivalent of a $23 million per minute “gift to Big Oil” that costs every person on Earth $1,400 annually.
In the report Out of Pocket: How Fossil Fuels Deplete Families and Economies 350.org Recalculates the International Monetary Fund’s estimates of fossil fuel subsidies, revealing the actual cost of fossil fuels to society and what governments spend to keep production flowing. These hidden costs – which total $12 trillion annually [1] “They are silently draining trillions of dollars from household budgets and draining state coffers,” while a handful of major corporations make windfall profits from the war in Southwest Asia.
The report highlights the following:
- Fossil fuels cause climate damage and air pollution worth $9.3 trillion annually, which is higher than the International Monetary Fund estimates.[2] These are social costs that the fossil fuel industry must bear but pays nothing for, and which the public bears through taxes and out-of-pocket payments.
- Annual climate reduction to $4.1 trillion [3] More than 5,900 gigawatts of new solar capacity could be financed – enough to power every home in Africa, South Asia and Latin America combined.
- The $12 trillion owed to the fossil fuel industry annually in avoided costs is more than 100 times the total global climate finance – or the money the world has pledged to help countries respond to the climate crisis.
- In the first 50 days of the war, more than $150 billion was drained from ordinary people to oil and gas companies due to rising energy prices alone. [4]
While decision makers from more than 50 countries gather to First International Conference on the Phase-out of Fossil Fuels In Santa Marta, Colombia this week, 350.org He said that leaders have an unprecedented opportunity to put the world on the right path. “Decades of delay have turned every oil price rise into a household emergency and every climate-fueled disaster into another withdrawal from the savings of the world’s poorest communities,” the group said.
350.org Calls on governments to:
- Tax fossil fuel gains and corporate excess profits to direct revenues directly into lowering people’s energy bills.
- Ending fossil fuel subsidies and replacing them with targeted household support; Investing public money in cheaper, reliable renewable sources keeps bills down forever.
- Protect families and businesses from future price shocks by ending the expansion of fossil fuel use and building 100% affordable renewable energy.
Using case studies from Asia, Africa and the Caribbean, the report also highlights how the alternative energy system is already shaping up. From community-owned grids, Indigenous-led wind projects, local commitments to 100% renewable energy, and regional subsidy reforms, the major power shift from fossil fuels to people-centered renewables has already begun.
Bill McKibben, climate activist and 350.org The founder said:
“An El Niño event means that 2026 and 2027 will set new global temperature records, which will lead to more chaos, and more reminders that it is the poorest people on Earth who must bear most of the costs of this ongoing tragedy. We have a narrow path out of these crises, and that path has been lit by the bombs resulting from this suspicious war. It would be a waste and a sin not to seize this moment.”
anne jelima, 350.org CEO said:
“The economic case for fossil fuels has not just weakened, it has collapsed. Climate chaos and volatile oil prices have pushed ordinary people to the breaking point: unable to afford food, transportation, housing, or health care. Leaders must acknowledge the true costs of fossil fuels and redirect public funds where they belong — to make clean energy a right, not a privilege.”
Hala Kilani, Head of Energy Diplomacy at REN21, said:
“Renewables are not controlled by a few fossil fuel exporting countries. They are abundant, distributed and affordable. They can stabilize costs and deploy them locally, empowering communities rather than concentrating energy. They are a solution for peace, development and justice. It is time to transition to reliable and affordable renewable energy.”
Hilda Flavia Nakabwe, founder of Fridays for Future Uganda, said:
“African households pay a triple price for fossil fuels: through taxes, through rising costs of living, and through worsening climate disasters. The fossil fuel system is not a distant global issue; it is something people experience in their daily lives. Public resources are being drained to support this system, while wealth is extracted and exported. We must ensure that polluters pay for the damage they have caused to our communities over generations. We must shift investment towards a system that reduces household costs, strengthens resilience, and prioritizes protecting the environment. People.
Jan Rosenau, professor of energy and climate policy at the University of Oxford, said:
“This crisis is a stark reminder of how dangerous dependence on fossil fuels is, with about 80% of global energy still coming from them, leading to the instability we are seeing today. We should focus on long-term solutions rather than applying short-term plasters to a much deeper problem. Price volatility is not a flaw of the fossil fuel system; it is a built-in feature of it. The real question is not how much the energy transition will cost us, but what it will cost us if we fail to act.”
Muhammad Mustafa Amjad, Director of the Renewables First Program in Pakistan, said:
“The system is designed to allow fossil fuels to continue to benefit, even as cleaner, cheaper alternatives become available. Pakistan imported less fossil fuels but ended up paying more, which shows how deeply flawed the system is. We learned how to build an energy system on fossil fuels, and now we must learn how to build one on renewables. This transformation is no longer just about economic growth; it is about human survival. Solar energy is not only a source of clean energy, it is also a driver of economic stability.”
Executive summary of the report
Editor’s Notes:
[1] (a) Nearly $11.4 trillion in underpriced fossil fuel costs – including explicit government subsidies, climate damage, air pollution, and road externalities – recalculated from IMF data using US EPA peer-reviewed damage models; Plus (b) nearly $700 billion in production-side subsidies for fossil fuel producers tracked by the OECD in 52 countries.
[2] The IMF’s climate damage figures are based on the carbon price – US$85 per ton of carbon dioxide – which represents the cheapest possible price for keeping global warming below 2°C, not the actual damage caused by fossil fuels. Using peer-reviewed damage models that now support the official social cost of carbon set by the US Environmental Protection Agency, 350.org recalculated these numbers for 186 countries.
[3] The social costs of fossil fuels are not taken into account in the IMF estimates, as I calculated them 350.org
[4] this 350.org The analysis calculates losses resulting from rising prices using weighted averages of oil and gas prices for this period, in addition to global consumption levels. It does not yet include broader impacts such as inflation, declining economic outcomes and unemployment.
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