A new IISD report warns governments still heavily favour fossil fuels over renewables, risking energy security, worsening crises and delaying a credible global transition to cleaner energy systems.
Governments worldwide are still spending around five times more public money on fossil fuels than on renewable energy, a new analysis by the International Institute for Sustainable Development shows, warning that current policies risk undermining energy security and delaying a credible transition.
The report, released on April 27 ahead of a major global conference in Santa Marta, found that public financial support for fossil fuels exceeded USD 1.2 trillion in 2024 compared with USD 254 billion for clean energy.
The analysis comes just before the high-level segment of the world’s first International Conference to Transition Away from Fossil Fuels, where senior officials are expected to discuss pathways toward cleaner energy systems.
Researchers said the figures highlight a persistent imbalance in government spending, arguing that any serious transition roadmap must begin with ending public financial support for fossil fuels and redirecting funds toward more resilient energy systems.
“Governments need to stop making the same mistakes and expect different outcomes,” said Angela Picciariello, senior researcher at IISD. “When energy prices spike, the instinct is often to spend more public money on fossil fuels. But that approach is costly, hard to unwind and leaves people exposed to the next crisis.”
The report shows a clear pattern linking fossil fuel subsidies to global price spikes. Subsidies reached USD 921 billion in 2024 and previously surged to USD 1.7 trillion in 2022 when oil prices rose sharply. With prices elevated again in 2026, researchers warn governments risk repeating the same cycle.
While some progress has been made in renewable energy investment, the pace remains insufficient. Support for renewables among G20 countries reached an estimated USD 169 billion in 2024, still far below fossil fuel spending and not enough to meet energy security and affordability challenges.
State-owned enterprises also remain heavily tied to fossil fuels. In 2024, G20 energy firms spent close to USD 360 billion on capital expenditure with 81 percent directed toward fossil fuel infrastructure. This trend, the report warns, exposes public finances to the risk of stranded assets.
However, there are signs of change. Some state firms, particularly in China, India and France, are increasing investments in renewables and grid upgrades while diversifying into storage and electrification.
International public finance is also shifting gradually. Fossil fuel financing from G20 governments and major multilateral development banks fell to USD 37 billion in 2024 while clean energy financing rose to USD 47 billion. Researchers described this as a positive step but said stronger alignment with long-term climate and energy goals is still needed.
The report highlights the growing social and economic costs of current policies. Energy crises disproportionately affect low and middle-income households, reducing purchasing power and forcing trade-offs between essentials such as food, transport and heating.
“Governments have repeatedly responded to price spikes with broader fossil fuel support, especially subsidies, that are costly, inefficient and often poorly targeted,” Picciariello said. “Over time, these measures deepen fiscal pressure, reinforce fossil fuel dependence and leave households exposed to the next shock.”
The IISD analysis outlines several steps governments can take immediately. These include replacing blanket fossil fuel subsidies with targeted social protection measures such as cash transfers and energy assistance for vulnerable households.
It also urges governments to scale up investment in renewables, electricity grids, storage, electrification and energy efficiency to reduce exposure to future shocks.
The report calls for clearer transition mandates for state-owned enterprises so public investment aligns with national energy security and clean energy goals. It also encourages countries to use the Santa Marta conference and the lead-up to COP31 to develop credible national roadmaps backed by concrete public finance commitments.
Another recommendation is to accelerate the redirection of international public finance toward clean energy and resilience, particularly for countries heavily dependent on energy imports and vulnerable to price volatility.
The findings are part of IISD’s broader Public Financial Support for Energy resource, which compiles global data and analysis on how public funds are shaping the energy system. The platform includes detailed research on fossil fuel subsidies, renewable energy support, state-owned enterprise spending and international finance flows.
IISD, an independent think tank with more than 300 experts working across offices in Winnipeg, Geneva, Ottawa and Toronto, focuses on advancing solutions for climate stability, sustainable resource management and equitable economic development in nearly 100 countries.
