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

This research paper by the International Institute for Sustainable Development (IISD) analyzes the misalignment of global public finance, noting that in 2024, public support for fossil fuels exceeded USD 1.2 trillion, nearly five times the USD 254 billion provided to clean energy. The report examines fossil fuel subsidies, G20 renewable energy support, state-owned enterprise (SOE) capital expenditure, and international public finance, arguing that governments must shift from blanket subsidies to targeted social protection and clean energy investment to reduce fiscal exposure and energy vulnerability.

• In 2024, global public financial support for fossil fuels reached over USD 1.2 trillion, which is nearly five times the USD 254 billion allocated to clean energy.
• Fossil fuel subsidies totaled USD 921 billion in 2024, with 90% (approximately USD 862 billion) targeting energy consumers and USD 43 billion targeting producers. These subsidies are expected to increase in 2026 as crude oil prices have risen above USD 100 per barrel.
• G20 governments provided an estimated USD 169 billion in financial support for renewable energy between 2020 and 2024. Japan and the United States were the primary contributors, spending roughly USD 81 billion combined, though U.S. support may decline in 2025–2026 due to policy changes and budget cuts.
• China's renewable financial support dropped from a 2022 peak of about USD 66 billion to approximately USD 15 billion in 2023, as the peak was an anomaly caused by clearing payment arrears in its feed-in-tariff system.
• Energy state-owned enterprises (SOEs) in G20 countries spent over USD 360 billion on capital expenditure (CapEx) 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) networks.
• Renewable CapEx for G20 SOEs grew from USD 22 billion in 2020 to approximately USD 39 billion in 2024. This growth was primarily driven by China (73% of the increase), followed by India (14%) and France (10%).
• Spending on T&D infrastructure by tracked SOEs nearly doubled from USD 16 billion in 2020 to over USD 30 billion in 2024, largely due to a USD 13 billion investment by the Saudi Electricity Company.
• International public finance for energy projects from G20 governments and multilateral development banks averaged over USD 100 billion annually over the last decade. Fossil fuel financing decreased to USD 37 billion in 2024, while clean energy financing rose 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} }