The world is spending more propping up coal—not less

Dirty but some times necessary.
Dirty but some times necessary.
Image: AP Photo/ Anupam Nath
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The signs of the climate crisis are visible all around us. Just not always in governments’ account books.

Countries of the G20, a club of the world’s largest economies, are giving the coal industry three times as much money in subsidies as they did a few years ago, according to a new report by the Overseas Development Institute (ODI). The sum spent on coal-fired power increased from $17 billion to $47 billion between 2013 and 2017.

The increase matters for two reasons. Together, the G20 bloc accounts for nearly 80% of global emissions, and its energy choices affect the global race to zero emissions. Worse still, the member countries increased funding for the dirtiest fossil fuel despite committing in 2009 to phase out such subsidies.

Subsidies are a necessary evil. Governments wield them when they need to rapidly reach short-term goals. Poor countries often subsidize fossil fuels to provide affordable electricity to citizens. Rich countries have used subsidies to drive down the cost of desirable technologies, such as solar and wind power.

Coal doesn’t need any more subsidies, though. Renewables are now so cheap in most parts of the world that they are often the energy source of choice, especially for citizens getting access to electricity for the very first time.

And yet these subsidies persist—and even continue to grow. Why? In India, China, and Indonesia, coal subsidies go towards propping up state-owned enterprises, which can provide decent jobs in large numbers. In India, they also support the banking sector, which is overburdened by poorly-performing coal assets. In rich countries like the US, Europe, and South Korea, some of this money is spent on energy resilience, which requires paying high prices to keep coal available for high-energy demand days.

It’s going to be hard to disentangle these complex economic motivations from their historical reliance on coal subsidies. But creativity can help. Governments can start supporting coal-mining communities that will struggle as the world abandons the dirty fuel. Money could also be reallocated to low-carbon technologies, such as carbon capture and storage. It’s a technology scientists believe will be necessary to cut emissions from existing coal power stations—set to run for decades still—or for cement plants that will emit carbon dioxide even after the elimination of fossil fuels.

There is some hope. In the same stretch that subsidies for coal-fired power increased, subsidies for coal mining decreased from $22 billion to $10 billion. That’s likely because countries are spending less developing new mines. And not all countries are beefing up coal power subsidies: Canada, France, and the UK have all cut support for the plants in recent years, while spending more money on renewables.