Coal Plants Got $1.6 Trillion in Subsidies Since Paris. Clean Energy Got Less.

Fatih Birol was in his office at the International Energy Agency headquarters in Paris on a Tuesday afternoon in March 2026 when he opened the spreadsheet his team had been compiling for six months. The numbers showed energy subsidies across the G20 economies from 2015—the year the Paris Agreement was signed—through 2024. He had expected the fossil fuel subsidy figures to be high. What surprised him was how much higher they were than the renewable energy investments in the same countries, over the same period.

The data showed that G20 governments had spent approximately $1.63 trillion in direct and indirect subsidies for coal, oil, and natural gas production and consumption between 2015 and 2024. Over the same period, public investment in solar, wind, battery storage, and grid infrastructure across those same economies totaled $1.48 trillion. The world's wealthiest democracies and largest emitters had spent more keeping fossil fuels artificially cheap than building the energy system that was supposed to replace them.

The thing is, this reversal was not accidental. It was the result of deliberate policy choices made year after year by finance ministries that treated climate commitments as aspirational and fuel price stability as essential. The gap widened most sharply after Russia's invasion of Ukraine in February 2022, when European governments alone allocated €681 billion to shield consumers from energy price shocks—more than the European Union had pledged to spend on its entire Green Deal industrial strategy through 2030.

What the Spreadsheets Revealed

The IEA analysis, cross-referenced with data from the International Monetary Fund and the Organisation for Economic Co-operation and Development, distinguishes between two types of subsidies. Direct subsidies—money governments spend to reduce the price consumers pay for gasoline, diesel, natural gas, or electricity generated from fossil fuels—totaled $847 billion across the G20 from 2015 to 2024. Indirect subsidies, which include tax breaks for oil and gas producers, exemptions from environmental regulations, and below-market financing for coal plants, added another $783 billion.

The largest subsidizers were not the petrostates one might expect. Indonesia spent $294 billion over the decade, primarily on kerosene and diesel subsidies that successive presidents promised to phase out but never did. India spent $277 billion, mostly on liquefied petroleum gas for cooking and diesel for farmers. China spent $201 billion, despite being the world's largest installer of solar panels and wind turbines. The European Union collectively spent $312 billion, with Germany, Italy, and Spain accounting for two-thirds of that total.

These figures do not include what economists call implicit subsidies—the cost of health damage from air pollution, environmental degradation, and climate change that fossil fuel use imposes but producers do not pay for. The IMF calculates those implicit subsidies at $5.7 trillion globally in 2024 alone, but that accounting remains contentious and is excluded from the $1.63 trillion figure.

The Uncomfortable Data

What makes these numbers particularly striking is that they emerged during the same decade when renewable energy became the cheapest source of new electricity generation in most of the world. Solar photovoltaic costs fell 89% between 2010 and 2024, according to the International Renewable Energy Agency. Onshore wind costs fell 69%. Battery storage costs fell 91%. The economic case for subsidizing fossil fuels had, by most conventional analyses, disappeared.

Yet governments kept writing the checks. The political logic was simple: energy price spikes cause inflation, inflation causes electoral losses, and subsidies suppress prices quickly. Clean energy investment, by contrast, reduces emissions over decades but does nothing for voters facing a winter heating bill. This dynamic intensified after February 2022, when European gas prices spiked to fourteen times their 2020 average and governments faced a choice between allowing steep price increases or intervening massively in energy markets. Every major European economy chose intervention.

The pattern repeated across income levels. Indonesia's President Joko Widodo pledged in 2014 to eliminate fuel subsidies and redirect spending to infrastructure. By 2024, fuel subsidies had returned to $37 billion annually—8.4% of the national budget, more than the government spent on education. India's Narendra Modi promised in 2014 to let fuel prices reflect market rates. By 2025, the government was spending $31 billion per year on cooking gas subsidies, diesel price supports, and below-cost electricity for farmers using diesel pumps.

The Stranded Asset Problem No One Will Name

Behind the subsidy figures lies a deeper problem that climate economists have been warning about for a decade but that finance ministries have largely ignored: stranded assets. These are fossil fuel infrastructure investments—coal plants, oil refineries, gas pipelines—that will have to be retired early or operated at a loss if countries meet their Paris Agreement commitments. The value of these assets, calculated by Carbon Tracker Initiative in October 2025, is approximately $11.6 trillion globally.

Here is what this means: governments are subsidizing assets that their own climate plans say must be phased out. Every dollar spent keeping a coal plant profitable is a dollar extending the operating life of an asset that climate science says should close. In Indonesia, 42 gigawatts of coal-fired power capacity came online between 2015 and 2025, much of it financed by state-owned banks offering below-market loans. Those plants were built to operate for thirty to forty years. Indonesia's nationally determined contribution under Paris requires coal generation to peak by 2030 and decline sharply thereafter. The math does not work.

The same contradiction appears in India, which added 67 gigawatts of coal capacity from 2015 through 2024 while simultaneously pledging to reach net-zero emissions by 2070. State-owned Coal India received $14.3 billion in direct and indirect subsidies over that period, including loan guarantees, discounted rail freight rates, and exemptions from environmental liability for abandoned mines. The company plans to increase production through 2030.

The Scientific Debate: Does Any of This Matter?

Not all economists agree that fossil fuel subsidies are the problem. A smaller but vocal group argues that the real barrier to clean energy transition is not subsidies but inadequate grid infrastructure, permitting delays, and the physical limits of renewable deployment. Michael Liebreich, founder of BloombergNEF, has argued that obsessing over subsidy figures distracts from the harder question of whether governments are building enough transmission lines, energy storage, and flexible gas capacity to manage grids with 70% or 80% renewable penetration.

There is evidence for this view. Germany has installed 140 gigawatts of wind and solar capacity but still burned record amounts of coal in 2022 and 2023 because it lacked sufficient battery storage and interconnection capacity to neighboring grids. Spain generates 60% of its electricity from renewables but faces grid congestion so severe that wind farms in Galicia are paid to shut down on windy days while gas plants in Andalusia run at full capacity. The bottleneck is not generation; it is everything else.

But the counterargument, made most forcefully by researchers at the International Institute for Sustainable Development, is that fossil subsidies actively slow the transition by making renewables less competitive. When governments cap electricity prices or subsidize diesel, they reduce the price signal that would otherwise drive investment in alternatives. Indonesia's diesel subsidy keeps the fuel cheaper than grid electricity in many rural areas, which eliminates the financial incentive for rooftop solar. India's free electricity for farmers using diesel pumps makes solar-powered irrigation economically irrational, even though the panels would pay for themselves in three years at market diesel prices.

What Happened When Countries Tried to Stop

The political difficulty of removing fossil subsidies is not theoretical. In November 2018, French President Emmanuel Macron announced a fuel tax increase designed to reduce diesel consumption and fund renewable energy. Within two weeks, the gilets jaunes movement had mobilized 300,000 protesters across France. Macron reversed the policy in December. In September 2012, Indonesia's President Susilo Bambang Yudhoyono cut fuel subsidies by 44%. Riots broke out in Jakarta, Surabaya, and Medan. The government restored half the subsidy within six months.

The few successful subsidy removals followed a different pattern. They were gradual, compensated the poorest households directly, and happened during periods of low global energy prices. Iran cut gasoline subsidies in 2010 and replaced them with direct cash transfers to 80% of households. The policy survived because crude oil prices were above $100 per barrel, government revenues were high, and the cash payments were generous enough to offset the price increase for most families. When Nigeria attempted the same reform in January 2012 during a period of fiscal stress, the resulting strikes shut down Lagos for a week and forced the government to partially restore subsidies.

The Open Question

Fatih Birol's spreadsheet, now published as part of the IEA's April 2026 World Energy Investment report, poses a question that no G20 government has answered clearly: if fossil fuel subsidies exceed clean energy investment, how exactly do current policies lead to net-zero emissions by 2050? The IEA's net-zero scenario requires global clean energy investment to reach $4.5 trillion annually by 2030—three times the 2024 level. Fossil fuel subsidies, in that scenario, fall to near zero by 2030.

Current trends point in the opposite direction. The Climate Policy Initiative calculated in February 2026 that global fossil fuel subsidies are on track to exceed $400 billion in 2026, up from $387 billion in 2025. Clean energy investment is rising, but not fast enough to offset the incentive structure subsidies create. Every dollar spent making fossil fuels cheaper is a dollar that delays the price signal needed to shift capital, consumer behavior, and industrial planning toward alternatives.

The thing is, governments know this. Finance ministers receive the same reports climate ministers do. They read the same IEA projections, the same IPCC assessments, the same Carbon Tracker analyses of stranded assets. The gap between fossil subsidies and clean investment persists not because policymakers lack information, but because the political cost of removing subsidies is immediate and the benefits of clean energy investment are distant. Until that calculation changes—through carbon pricing, through cash transfer systems that cushion the poorest, through electoral constituencies that reward long-term planning—the spreadsheet will keep showing the same uncomfortable truth: governments are spending more to preserve the energy system that science says must end than to build the one that must replace it.

What no one yet knows is whether the political will to reverse that pattern will emerge before the climate costs of delay become irreversible. The science is clear on the consequences. The economics are clear on the alternatives. The missing variable is whether democracies can make decisions today for benefits that arrive after the next election.