The USD 1.2 Trillion Problem: Energy Crisis Strengthens Case for Clean Public Finance

In 2024, global public financial support for fossil fuels reached USD 1.2 trillion, nearly five times the USD 254 billion provided to clean energy. The analysis highlights a cycle where energy price shocks lead to regressive blanket subsidies that entrench fossil fuel dependency. While international public finance is trending toward clean energy, G20 state-owned enterprises (SOEs) remain heavily invested in fossil fuels, with 81% of their 2024 capital expenditure funding fossil infrastructure. The authors advocate for replacing blanket subsidies with targeted social protection and aligning SOE investments with transition goals to build resilient, low-carbon energy systems.

• Global public financial support for fossil fuels was USD 1.2 trillion in 2024, which is nearly five times the USD 254 billion allocated to clean energy.
• Fossil fuel subsidies are expected to increase in 2026 due to crude oil prices rising above USD 100 per barrel in April, following a historical peak of USD 1.7 trillion in 2022 after Russia's invasion of Ukraine.
• The majority of fossil fuel subsidies in 2024, approximately USD 862 billion, targeted energy consumers, while producer subsidies were estimated at USD 43 billion.
• G20 state-owned enterprises (SOEs) spent over USD 360 billion on energy capital expenditure in 2024, with 81% (over USD 290 billion) funding fossil fuel infrastructure and only 19% going to renewable power, storage, and transmission and distribution (T&D).
• Renewable energy capital expenditure by state power and coal companies grew by 68% between 2020 and 2024, with China accounting for 73% of the total increase, followed by India (14%) and France (10%).
• Spending on transmission and distribution (T&D) infrastructure by tracked SOEs nearly doubled from USD 16 billion in 2020 to over USD 30 billion in 2024, largely driven by a USD 13 billion investment by Saudi Electricity Company.
• International public finance for energy projects from G20 governments and multilateral development banks has shifted, with fossil fuel financing dropping to USD 37 billion in 2024 and clean energy financing rising to USD 47 billion in 2024.

APA

Do, N., Urazova, I., Posada, E., & Picciariello, A. (2026). The USD 1.2 Trillion Problem: Energy Crisis Strengthens Case for Clean Public Finance. International Institute for Sustainable Development. https://www.iisd.org/articles/deep-dive/usd-12-trillion-problem-energy-crisis-strengthens-case-clean-public-finance

Chicago

Do, Nhat, Indira Urazova, Eduardo Posada, and Angela Picciariello. The USD 1.2 Trillion Problem: Energy Crisis Strengthens Case for Clean Public Finance. International Institute for Sustainable Development, 2026. https://www.iisd.org/articles/deep-dive/usd-12-trillion-problem-energy-crisis-strengthens-case-clean-public-finance.

Wikipedia

{{cite report |last1=Do |first1=Nhat |last2=Urazova |first2=Indira |last3=Posada |first3=Eduardo |last4=Picciariello |first4=Angela |title=The USD 1.2 Trillion Problem: Energy Crisis Strengthens Case for Clean Public Finance |publisher=International Institute for Sustainable Development |date=27 April 2026 |url=https://www.iisd.org/articles/deep-dive/usd-12-trillion-problem-energy-crisis-strengthens-case-clean-public-finance |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{do2026usd, author = {Do, Nhat and Urazova, Indira and Posada, Eduardo and Picciariello, Angela}, title = {{The USD 1.2 Trillion Problem: Energy Crisis Strengthens Case for Clean Public Finance}}, institution = {International Institute for Sustainable Development}, year = {2026}, month = apr, url = {https://www.iisd.org/articles/deep-dive/usd-12-trillion-problem-energy-crisis-strengthens-case-clean-public-finance}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }