How much are governments spending on clean energy? Here’s the top-5 list

• Global investment in clean energy is accelerating, with $1.34 trillion allocated by policymakers since 2020.The United States’ budget for clean energy investments exceeds $559 billion – more than any other nation.The World Economic Forum’s Fostering Effective Energy Transition 2023 report, sees renewed focus on energy security, which restricts clean energy access for many developing nations.

As the energy transition unfolds, global investment in clean energy is accelerating, with $1.34 trillion allocated by policymakers since 2020. Which countries are leading the charge and which ones are playing catch up?The latest update of the International Energy Agency’s (IEA) Government Energy Spending Tracker (previously called the Sustainable Recovery Tracker) offers a snapshot of the current situation.IEA analysis tracks almost 1,600 government financial measures across 68 countries, which could help to support the first global stocktake of the Paris Agreement at the COP28 climate talks.

Key areas of spending include support for low-carbon electricity generation, low- or no- emissions transport, energy-efficient buildings and industry. Here is the top-five list of countries investing in a clean-energy future.

5. Spain

European governments dominate the global list of clean energy investors, with Spain’s government investing more than $89 billion as of June 2023.More than two-fifths of the country’s total support ($38.1 billion) supports energy affordability to help consumers and businesses cope with sky-high energy prices from the global energy crisis and Russia’s invasion of Ukraine. A further $20.5 billion (22.9%) is being invested in low-carbon and efficient transport systems, followed by investment in energy-efficient buildings.

4. France

Across the border, neighbours France have committed more than half of the total energy investment – almost $150 billion – to energy affordability. The country’s investment breakdown follows a similar pattern to Spain, with policymakers dedicating almost one-fifth of spending ($28.5 billion) on measures to boost energy efficiency in buildings and industry, followed by efforts to make transport systems more efficient and less polluting.

3. Italy

Energy spending in Italy reached almost $176 billion as of June 2023, including energy affordability investment exceeding $64 billion, accounting for the largest share. Government spending on clean transport systems approached $48 billion, with efforts to decarbonize industry and buildings totalling $45.1 billion.

Germany’s spending on clean energy is approaching double that of third-placed Italy, with investments exceeding $339 billion as of June 2023. As with other leading European countries, the bulk of investment (more than 3 quarters) supports energy affordability. Notably, Germany was heavily dependent on fossil fuel supplies from Russia and more exposed to the market turmoil that followed the invasion of Ukraine.Around 10% of investment supports building and industrial efficiency measures and clean transport development, respectively, with $17 billion devoted to fuels and technology innovation, more than most other leading European nations.

1. United States of America

As the world’s biggest economy, the US budget for clean energy investment, at over $559 billion, swamps its nearest rivals.Investment in low-carbon electricity projects accounts for over a third of this, followed by almost a quarter of the total investment dedicated to developing low-carbon and efficient transport systems. Fuels and technology innovation received $79 billion, followed by efforts to make buildings and industries more energy efficient. Meanwhile, almost 3% of the US budget ($16.3 billion) was dedicated to ensuring a people-centred energy transition.

Discover

What’s the World Economic Forum doing about the transition to clean energy?

Moving to clean energy is key to combating climate change, yet in the past five years, the energy transition has stagnated. Energy consumption and production contribute to two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Plus, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018 energy intensity improved by 1.2%, the slowest rate since 2010. Effective policies, private-sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system. Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing energy transition is the lack of readiness among the world’s largest emitters, including US, China, India and Russia. The 10 countries that score the highest in terms of readiness account for only 2.6% of global annual emissions.

To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials Platform is working on initiatives including, Systemic Efficiency, Innovation and Clean Energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.Additionally, the Mission Possible Platform (MPP) is working to assemble public and private partners to further the industry transition to set heavy industry and mobility sectors on the pathway towards net-zero emissions. MPP is an initiative created by the World Economic Forum and the Energy Transitions Commission. Is your organisation interested in working with the World Economic Forum? Find out more here.

The developed versus developing nations

New funds for clean energy investments totalled $130 billion in the six months to April 2023. But while investment is increasing, this rate of growth is one of the slowest since Q1 of 2020; a fact that challenges calls for accelerated action on the climate crisis. There is also a huge disparity in clean energy spending between advanced economies and emerging markets and developing economies.

A wealth gap exists between developed and developing nations, with advanced economies accounting for 93% of total government investment in clean energy and 85% of consumer affordability support.The World Economic Forum’s Fostering Effective Energy Transition 2023 report finds that geopolitical volatilities have slowed a decade of progress on embracing clean, sustainable energy, as countries shift their focus to energy security. This restricts affordable access to energy and sustained economic development for many developing nations. Business as usual leaves many developing nations facing rising debt levels and limited investment budgets. However, as the climate crisis doesn’t recognize national or economic boundaries, more needs to be done to ensure equitable access to sources of investment to facilitate the switch to clean energy.