Covid economic recovery plans failing to target green energy, IEA report warns
Image credit: reuters
Governments are spending just a fraction of funds allocated to recovering from the Covid-19 pandemic on clean energy initiatives, according to a report from the International Energy Agency.
The amount of clean energy spending in the second quarter of this year totalled around $380bn, or just 2 per cent of their total stimulus funds in response to the pandemic.
These sums of money, both public and private, currently fall well short of what is needed to reach international climate goals, the report suggests. These shortfalls were particularly pronounced in emerging and developing economies, many of which face financing challenges.
Under the 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.
“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. Despite increased climate ambitions, the amount of economic recovery funds being spent on clean energy is just a small sliver of the total,” said Fatih Birol, the IEA executive director.
Governments have mobilised $16tr in fiscal support throughout the Covid-19 pandemic, most of it focused on emergency financial relief for households and firms.
In June 2020, a few months after the pandemic began, the IEA detailed a $3tr 'Sustainable Recovery Plan' that would create jobs in the electricity sector, particularly in grids and renewables, and through initiatives such as retrofitting buildings to improve energy efficiency.
Whether influenced by the report or not, the UK government subsequently adopted some of the proposals, including the launch of a £3bn 'green homes grant' that was scrapped just six months after launch, as well as funding for technologies including hydrogen, electric vehicles and railway infrastructure.
The majority of green funds globally were provided by advanced economies, which are nearing 60 per cent of the investment levels envisaged in the Sustainable Recovery Plan, compared to emerging and developing economies that have so far only reached about 20 per cent 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,” Birol said.
“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.
“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.”
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