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

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.

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.

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.

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.

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.

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.