This study explores the financial cost of providing subsidies to the coal industry in addition to the cost of externalities from coal use. It also discusses the extent to which coal subsidies act as a barrier to the development of renewable energy in China. The study finds that China is supporting the coal industry through the provision of billions of dollars’ worth of subsidies to consumers and producers. In addition to the financial cost, these subsidies increase the consumption of coal, producing externalities including air pollution and greenhouse gas emissions.