Clean energy spending earmarked by governments in response to the COVID-19 crisis has risen by 50 per cent over the past five months and now stands at over 710 billion US dollars worldwide, though there are troubling imbalances between regions, according to the latest update of the IEA’s Sustainable Recovery Tracker.
This unprecedented amount of enacted spending is more than 40 per cent larger than the global green spending contained in the stimulus packages that governments enacted following the global financial crisis in 2008.
Advanced economies account for the bulk of this effort, with over 370 billion US dollars intended to be spent prior to the end of 2023, a level of short-term government spending that would help keep the door open for the IEA’s global pathway to net zero emissions by 2050.
Across emerging and developing economies, however, the total amount of financial resources being dedicated to sustainable recovery measures is one-tenth of the amount in advanced economies. The gap is unlikely to narrow in the near term, as governments with already limited fiscal means now face the challenge of maintaining food and fuel affordability for their citizens amid the surge in commodity prices following Russia’s invasion of Ukraine.
“Countries, where clean energy is at the heart of recovery plans, are keeping alive the possibility of reaching net-zero emissions by 2050, but challenging financial and economic conditions have undermined public resources in much of the rest of the world,” said Fatih Birol, the IEA Executive Director. “International cooperation will be essential to change these clean energy investment trends, especially in emerging and developing economies where the need is greatest.”
Even in advanced economies, some of the earmarked funds risk not reaching the market within their envisaged timelines. Delays in setting up government programmes, ongoing supply chain disruptions, labour shortages and financial uncertainty have clogged project pipelines. In addition, consumer-facing measures – such as incentives for building retrofits and electric vehicles – are struggling to reach a wider audience because of issues including red tape and lack of information.
In Central and Eastern Europe, Hungary has spent the least amount of funds: only 0.31 billion US dollars, mainly concentrated in the area of energy-efficient buildings and industry, compared to the largest spender in the same area which is Greece (5.18 billion US dollars). The second most invested area in the CEE region was the transport sector, in which Czechia invested 2.77 billion US dollars and Estonia 1.54 billion US dollars.
“Governments who can remove red tape and quickly set up effective programmes will be the ones to reap the benefits and position themselves in the new global energy economy that is emerging,” said Dr Birol. “While the latest update of the Sustainable Recovery Tracker does point to promising signs in advanced economies, the world still needs to massively expand its clean energy deployment efforts throughout this decade, first and foremost in developing economies, if we are going to preserve the hope of limiting the global temperature rise to 1.5 °C.”