Global carbon emissions are expected to rise as only 2 per cent of Covid-19 stimulus measures are set to power energy transition, the International Energy Agency has said.
Governments across the world have committed to spend only $380 billion on clean energy development under stimulus packages to ease the impact of the pandemic on the economy.
“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," Fatih Birol, the IEA executive director, said.
"Despite increased climate ambitions, the amount of economic recovery funds being spent on clean energy is just a small sliver of the total.”
The Covid-19 pandemic, which disrupted global supply chains and caused the world economy to contract 3.5 per cent in 2020 according to the International Monetary Fund, also heightened awareness about emissions.
Globally around $16 trillion was committed in fiscal support to help stimulate growth, over the course of 2020. However, only 2 per cent of the commitments were towards energy transition.
Under governments’ current recovery spending plans, global carbon dioxide emissions are set to climb to record levels in 2023 and continue rising in the following years, according to the IEA.
Lack of funding towards clean energy development would derail efforts to reach net carbon neutrality by the middle of the century, the agency added.
The IEA's Sustainable Recovery Tracker, which monitors governments’ fiscal responses to the Covid-19 crisis and estimates their impact on clean energy investments and global CO2 emissions, said new spending commitments made in 2020 would add an extra $350bn annually to clean energy and electricity systems between 2021 and 2023. The additional spending marks an increase of 30 per cent over the levels seen in recent years.
However, the funding is still only 35 per cent of the requirement the Paris-based agency recommended through its sustainable recovery plan.
Most of the commitments towards clean energy investments come from G20 economies. In advanced economies, the stimulus packages are likely to meet 60 per cent of sustainable energy investment needs.
However, in emerging and developing economies, the share declines to 20 per cent as the countries remain focused on emergency health provisions.
“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 said.
"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," he added.