On May 18 the International Monetary Fund (IMF) published a report titled “ How Large are Global Energy Subsidies? ” The question is a bit misleading: most readers, when they see the word subsidy, probably tend tothink of tax breaks or cash gifts to specific industries. The report, however, uses the term mostly to refer to environmental externalities—and not ones tied to all energy use, but ones related to fossil fuel combustion in particular. An economic externality is an impact of a commercial activity that is not reflected in the prices of goods or services traded. There can be positive externalities: if I buy organic, responsibly farmed food, I usually expect to pay more—thus the beneficial impact of my food choice upon the environment isn’t reflected in a price that would reinforce my behavior; just the opposite is true. […]