Subsidy, n: a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.

From the IMF report: "Underpricing fossil fuels not only undermines domestic and global environmental objectives but is a highly inefficient policy for helping low- income households2 and has a sizable fiscal cost—too little revenue is raised from fuel taxes, implying other taxes or government deficits must be higher or public spending lower."

The subsidy is that we, as taxpayers and breathers of air, are paying is in higher taxes or lower spending elsewhere or by increased debt/deficits. So, because their costs are externalized, the price of the commodity is kept low thereby forcing governments to pay those costs.