Governments around the world are deploying an unprecedented amount of money to stabilise and rebuild their economies, but only about 2% of that spending is being allocated to clean energy measures.
This is according to a new analysis by the International Energy Agency. The large amounts of money being mobilised, which is coming from both public and private sources, is falling short of what is needed to reach international climate goals. This shortfall is particularly noticeable in emerging and developing economies, many of whom are facing financing challenges.
According to governments’ current recovery spending plans, global carbon dioxide emissions will climb to record levels in 2023 and continue rising in the near future. This means the world is straying very far from the pathway to net-zero emissions by 2050 the IEA set out in its Global Roadmap to Net Zero.
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These conclusions are drawn from a new Sustainability Recovery Tracker launched by the IEA to help policymakers assess how much recovery plans are helping to address climate change. The new online tool is a contribution to the G20 Ministerial Meeting on Environment, Climate and Energy which takes place on 22 and 23 July in Italy.
The Tracker monitors government spend allocated to sustainable recoveries and then estimates how much that money will boost overall clean energy investment and to what degree that will affect the trajectory of global CO2 emissions. The Tracker considers more than 800 national sustainable recovery policies in its analysis. All of these are publically available on the IEA website.
Dr Fatih Birol, IEA executive director: “Since the COVID-19 crises 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. 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 in fiscal support throughout the COVID-19 pandemic, most of it focused on emergency financial relief for households and firms. Only 2% of the total is earmarked for clean energy transitions.
Right at the beginning of the pandemic engulfing the world, the IEA released its Sustainable Recovery Plan, which recommended $1 trillion of spending globally on clean energy measures that could feature prominently in recovery plans.
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According to the Sustainable Recovery Plan – developed in collaboration with the International Monetary Fund – this spend would boost global economic growth, create millions of jobs and put the world on track to meet the Paris Agreement goals.
According to the Tracker, all the key sectors highlighted in the IEA Sustainable Recovery Plan are receiving inadequate attention from policy makers. Current government plans would only increase total public and private spending on clean energy to around $350 billion a year by 2023 – only 35% of what is envisaged in the Plan.
The Tracker highlights the stark geographic disparities that are emerging in clean energy investment. The majority of funds are being mobilised in advanced economies, which are nearing 60% of the investment levels envisaged in the Sustainable Recovery Plan. Emerging and developing economies, many of which have limited fiscal leeway, have so far mobilised only about 20% of the recommended spending levels.
“Not only is clean energy investment still far from what’s needed to put the world on a path to reaching net-zero emissions by mid-century, it’s not even enough to prevent global emissions from surging to a new record. Many countries – especially those where the needs are greatest – are also missing the benefits that well planned clean energy investment brings, such as stronger economic growth, new jobs and the development of the energy industries of the future,” said Birol.
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“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. 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.”
The IEA’s new Sustainable Recovery Tracker monitors governments’ fiscal responses to the Covid-19 crisis and estimates their impact on clean energy investments and global CO2 emissions