Shifting Public Financial Flows From Fossil Fuels To Clean Energy Under The Paris Agreement
International Institute for Sustainable Development (IISD)
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Abstract: This formal UNFCCC Global Stocktake submission tracks the ongoing gap between climate finance pledges and actual fossil fuel funding. Despite commitments under Article 2.1(c) of the Paris Agreement, fossil fuel subsidies reached USD 732B in 2021 and exceeded USD 1T in 2022. The authors analyze datasets including Fossil Fuel Subsidy Tracker and Energy Policy Tracker to expose how state-owned enterprises and development finance institutions continue to fund high-carbon assets. They detail the fiscal, environmental, and equity costs of fossil lock-in and outline political economy challenges including regulatory opacity and low public trust. Proposed reforms center around price corrections, transparency, just transition planning, and institutional accountability. Kenya is highlighted as a country needing subsidy reform and reallocation to clean cooking, mini-grids, and climate-aligned energy systems. The report also supports embedding fossil phaseout into NDCs and international lending frameworks.