Governments worldwide are deploying an unprecedented amount of fiscal support aimed at stabilising and rebuilding their economies, but only about 2 per cent of this spending has been allocated to clean energy measures, according to a new analysis from the International Energy Agency (IEA).
The sums of money, both public and private, being mobilised worldwide by recovery plans fall well short of what is needed to reach international climate goals. These shortfalls are particularly pronounced in emerging and developing economies, many of which face particular financing challenges.
Under governments’ current recovery spending plans, global carbon dioxide (CO2) emissions are set to climb to record levels in 2023 and continue rising in the following years. This would leave the world far from the pathway to net-zero emissions by 2050 that the IEA set out in its recent Global Roadmap to Net-Zero.
These findings come from the new Sustainable Recovery Tracker that the IEA launched to help policymakers assess how far recovery plans are moving the needle on climate.
“Since the Covid-19 crisis erupted, many governments may have talked about the importance of building back better for a cleaner future, but many of them are yet to put their money where their mouth is,” said Fatih Birol, the IEA Executive Director. “Despite increased climate ambitions, the amount of economic recovery funds being spent on clean energy is just a small sliver of the total.”
Governments have mobilised 16 trillion US dollars in fiscal support throughout the COVID-19 pandemic, most of which focused on emergency financial relief for households and firms. Only 2 per cent of the total is earmarked for clean energy transitions. In the early phases of the pandemic, the IEA released the Sustainable Recovery Plan, which recommended 1 trillion US dollars of spending globally on clean energy measures that could feature prominently in recovery plans. According to the Plan – developed in collaboration with the International Monetary Fund – this spending would boost global economic growth, create millions of jobs and put the world on track to meet the Paris Agreement goals.
“Governments need to increase spending and policy action rapidly to meet the commitments they made in Paris in 2015 – including the vital provision of financing by advanced economies to the developed world,” Mr Birol added. “But they must then go even further by leading clean energy investment and deployment to much greater heights beyond the recovery period in order to shift the world onto a pathway to net-zero emissions by 2050, which is narrow but still achievable – if we act now.”