Global Clean Energy On the Rise

Global Clean Energy On the Rise | Future Business

The International Energy Agency (IEA) says government clean energy spending commitments have jumped to USD 710 billion – 40 per cent above the levels after the 2008 global financial crisis. But with geopolitics and Covid still in flux, what does it mean for business?

The IEA’s latest flagship report, its Sustainability Recovery Tracker, measures global spending strategies seeking a sustainable industrial recovery from the Covid pandemic.

Clearly it’s essential data for global businesses to crunch, to align coordinated strategy correctly, plan spend and more. IEA says in response to the Covid pandemic and the ensuing economic crisis, governments worldwide have mobilised an unprecedented amount of fiscal support aimed at stabilising and rebuilding their economies – now around USD 18.2 trillion in total.

Corporates will be wanting to know how and where to access and leverage finance as part of sustainable transitions to post-pandemic green business. Many countries have identified clean energy measures as a priority within their fiscal support measures.

The IEA Tracker estimates that if governments mobilised USD1 trillion in clean energy investments each year from 2021-2023, they would boost the global economy, create millions of jobs and put emissions onto a Paris-compliant trajectory. This near-term investment effort is aligned with the Agency’s Net Zero Emission Scenario.

And it seems that while not yet there, standing at some USD 710 billion, the necessary clean cash is at least beginning to flow to make this happen. The IEA Tracker additionally measures global recovery plans against target level of spending by monitoring energy-related policies and government spending on clean energy measures by country and by sector in the wake of the pandemic.

It also evaluates the actual impact on total public and private recovery spending on clean energy measures. What can it teach business about tomorrow’s corporate direction?


Of the USD 710 billion on clean energy, advanced economies account the bulk of this effort, with over USD 370 billion intended to be spent prior to the end of 2023, a level of short-term government spending that would help keep the door open for the IEA’s global pathway to Net Zero emissions by 2050.

Across emerging and developing economies, however, the total amount of fiscal resources being dedicated to sustainable recovery measures is one-tenth of the amount in advanced economies, reflecting their very different financial and economic circumstances.

This is intriguing for corporates because within the emerging economies, opportunities to do good, invest and make money are clearly to hand. Competition is arguably tighter across clean energy within developed economies, so the question is where to invest time and effort to leverage the best wins. It’s a balance of nascent opportunity and risk versus a more competitive established marketplace. 

In the emerging and developing economies, around USD 52 billion of sustainable recovery spending is planned by the end of 2023, well short of what is needed in a pathway towards Net Zero emissions by 2050.

IEA says the gap is unlikely to narrow in the near term, as governments with already limited fiscal means now face the challenge of maintaining food and fuel affordability for their citizens amid the surge in commodity prices following Russia’s invasion of Ukraine.

“Countries where clean energy is at the heart of [sustainable Covid] 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 cooperation will be essential to change these clean energy investment trends, especially in emerging and developing economies where the need is greatest.”

Advanced Risk

Even in advanced economies, some of the earmarked funds risk not reaching the market within their envisaged timelines. Delays in setting up government programmes, ongoing supply chain disruptions, labour shortages and financial uncertainty have clogged project pipelines.

In addition, consumer-facing measures – such as incentives for building retrofits and electric vehicles – are struggling to reach a wider audience because of issues including red tape and lack of information.

“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,” said Dr Birol. The same, evidently, applies to corporates.

“While the latest update of the Sustainable Recovery Tracker does point 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.”

Rising fossil fuel prices, which have been exacerbated by Russia’s invasion of Ukraine, have pushed governments both to enact immediate measures to make energy more affordable and to explore efforts to reduce fossil fuel dependency.

The IEA’s tracking shows that emergency affordability support by governments worldwide for households and businesses has reached about USD 270 billion since the start of the winter heating season in the Northern Hemisphere in 2021.

But many of the measures most effective in reducing oil and gas demand, such as installing heat pumps and expanding the use of public transport, bike lanes and high-speed rail have not yet received the needed level of government support to date.


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