Governments pour $2t into clean energy since 2020

Majority of the direct public spending was in China, amongst others.

Governments across the world have allocated more money to renewable energy, with direct investment support for such projects reaching $2t since 2020, nearly triple the amount committed following the 2007-2008 financial crisis, according to the International Energy Agency (IEA).

In its inaugural State of Energy Policy 2024 report, IEA also said that 80% of direct government spending allocated was in China, the European Union and the United States.

“The unprecedented level of policy and investment support for clean energy is a recognition that these technologies not only reduce emissions but help safeguard energy security,” said Laura Cozzi, IEA director of Sustainability, Technology and Outlooks. 

The IEA report found that domestic manufacturing incentives for clean energy are one area of public investment that continues to grow. It accounted for almost 10% of total government spending since the beginning of the decade.

At the consumer level, IEA said the cost of short-term government support totalled $940b at the height of the global energy crisis. Whilst many emergency measures have been eased, government-led programmes to address issues of ongoing affordability and competitiveness remain in place to address the upfront costs of adopting clean energy technologies, it added.

The concentration of clean energy supply chains has led to a surge in trade policies focused on domestic manufacturing and security, IEA said. Nearly 200 new trade measures have been introduced since 2020, compared to less than 40 in the previous five years.

Policy intervention has also expanded in energy performance standards, with 35 countries that represent 20% of global greenhouse gas emissions passing new energy performance regulations last year.

However, IEA said some countries have reversed certain regulations, such as bans on new fossil fuel boilers and internal combustion engine vehicles, and phase-outs of unabated coal. These affected approximately one percent of current global emissions and were outweighed by increased stringency in other regions.