Clean energy spending earmarked by governments in response to the coronavirus crisis has surged 50 per cent over the past five months to reach $710 billion globally, the International Energy Agency said.
The total spend is 40 per cent higher than the global green spend contained in the stimulus packages that governments introduced after the financial crisis in 2008, the Paris-based agency said on Tuesday.
Advanced economies account for the bulk of this effort, with more than $370bn set aside for spend by the end of 2023, while the total amount of fiscal resources being dedicated to a sustainable recovery in emerging and developing economies is one-tenth of the amount in advanced economies, according to the report.
About $52bn of sustainable recovery spending is planned in the emerging and developing economies by the end of 2023, which is “well short of what is needed in a pathway towards net zero emissions by 2050”, the IEA said.
Nations and companies are grappling to secure adequate natural gas in a global power crunch as economies recover from the pandemic.
The Russia-Ukraine war has added another dimension to the situation, increasing the need for liquefied natural gas supplies and sending prices to record levels, which may complicate plans by cash-strapped emerging nations seeking to shift to the fuel.
“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, IEA executive director.
“International co-operation will be essential to change these clean energy investment trends, especially in emerging and developing economies where the need is greatest.”
In response to the pandemic and the ensuing economic crisis, governments have mobilised an unprecedented amount of fiscal support aimed at stabilising and rebuilding their economies, IEA said.
Total fiscal support measures currently stand at $18.2 trillion, with many countries identifying clean energy measures as a priority.
The IEA sustainable recovery plan, developed in 2020 in collaboration with the IMF, estimated that if governments mobilised $1tn in clean energy investments each year from 2021 to 2023, they would boost the global economy, create millions of jobs and put emissions on to a Paris-compliant trajectory.
“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,” Mr Birol said.
While the agency's latest Sustainable Recovery Tracker points 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”, he said.
Delays in setting up government programmes, continuing supply chain disruptions, labour shortages and financial uncertainty have clogged project pipelines, the IEA said.
It estimates that government spending that has been earmarked for spending before 2023 could support more than $1.6tn worth of sustainable investments by mobilising higher levels of private sector participation.