More Public Scrutiny Needed as most Governments Fail to Build Back Better

By Lukas Welker, Joachim Roth and Ivetta Gerasimchuk

As the world enters a war-driven crisis of high energy prices, climate champions need every piece of evidence to prevent the stalling or reversal of the clean energy transition. 

The world has faced significant upheaval in recent years, amid the COVID-19 pandemic, the war in Ukraine, and extreme weather events that continue to wreak devastation in communities around the globe. However many of the measures being taken today to respond to these challenges risk making an already difficult situation worse.

While the choices that policy-makers are facing today are difficult—involving delicate trade-offs between short-term problems and long-term impacts—the COVID-19 pandemic has shown that governments’ responses, despite pledges to build back better, have ultimately meant that public money commitments still lean heavily towards fossil fuels, rather than clean energy.

Many of them are providing subsidies to households regardless of their incomes, or are bailing out oil, gas and coal companies as a quick fix for ensuring that GDP growth does not take too hard a hit. Faced with the risks of an economic downturn, governments need to be aware that such measures do not always save jobs or protect the poor as intended but exacerbate our climate crisis and increase its long-term costs.

For instance, in the aftermath of the 2008-2009 financial meltdown, despite some attempts at a “green recovery”, the global economy rebounded with ever higher emissions. Similarly, as the data shows, “fossil-free recovery”  from the COVID-19 pandemic remained an elusive target in 2020-2021. 

In this context, public demand and scrutiny have been – and will continue to be – key to ensuring that “fossil-free” policies and “green strings” become more mainstream in a growing number of countries.

Fossil Fuels Received More Recovery Support Than Clean Energy in 2020-2021

The Energy Policy Tracker (EPT), a network of 29 expert organizations, that has been documenting COVID-19 responses by 38 major economies and eight Multilateral Development Banks (MBDs) (see Figure 1) alongside other recovery trackers. The tracker has focused on conditional and unconditional support to both fossil fuels and clean energy in power generation, energy resource extraction, mobility and building sectors. The MDB data is, for the time being, for 2020 only.

The tracker found that over 2020-2021, 41% of such quantified support measures, or USD 515 billion, went to fossil fuel-intensive sectors while only 38% went to clean energy. In the meantime, a lot of support policies, for example via state-owned enterprise investments, remain unquantified. 

Figure 1. Public money commitments to fossil fuels, clean and other energy in 38 recovery packages from January 2020 to December 2021, USD billion

Note: “Other energy” includes policies outside of the fossil fuel or clean energy categories or in both of them. This includes, among other policy measures, combined support for fossil fuels and clean energy, nuclear energy, first-generation biofuels, and hydrogen of unspecified origin. The Energy Policy Tracker methodology page gives an overview of which policies are included in each category.

Recovery Packages Have Gradually “Greened” 

The early responses to the COVID-19 crisis were rushed and fossil-fuel intensive. In particular, USD 120 billion went to airline bailouts in the mobility sector. Governments also signaled that they were ready to go ahead with some “shovel-ready” fossil-fuel projects such as the Keystone XL pipeline in Canada and in the United States (although this was later abandoned) and Europe’s largest gas power plant in the United Kingdom. Only a few governments had blueprints for support to clean energy that could also be recycled as responses to the Covid19 crisis. The European Green New Deal deserves a special mention as a plan that was already under discussion before the pandemic and continues to move closer to becoming fully realized

With time, however, more national and subnational governments, for example, in the US and Canada, have rolled out “green recovery” packages. In particular, the “greening” of the recovery responses in Figure 2 is due to the US Infrastructure Investment and Jobs Act passed in November 2021. This measure represents about half of the EPT-captured commitments in the United States, with USD 65 billion for expanding, modernizing, and electrifying public transportation networks that the EPT classifies as “clean conditional” support. 

Figure 2. Public money commitments to fossil fuels, clean and other energy from January 2020 to December 2021, USD billion

Note: “Other energy” includes policies outside of the fossil fuel or clean energy categories or in both of them. This includes, among other policy measures, combined support for fossil fuels and clean energy, nuclear energy, first-generation biofuels, and hydrogen of unspecified origin. The Energy Policy Tracker methodology page gives an overview of which policies are included in each category.

Preparing for Future Crises 

Governments need to make sure that they design policies on energy production and use in a way that reduces carbon emissions while also tackling inequality and poverty. The inequality and poverty dashboard hosted by the EPT shows that only 13% of COVID-19 policies put in place across 30 countries from January 2020 to November 2021 achieve a “win-win-win” on the energy transition, poverty, and inequality. For example, the buildings sector  received only 5% of funding despite its potential to drive emission reductions, create green jobs and reduce household energy costs, while retrofits in social housing represent less than 1% of the commitments to energy efficiency in buildings.

As the world becomes more volatile and increasingly suffers from the climate crisis, there is little room for “business-as-usual” policies. Instead, governments need resilient blueprints for climate action and “win-win-win” solutions that can be implemented even amid uncertainty. These blueprints need to be adaptable for crises that may emerge in the months and years to come, such as the energy markets’ turmoil due to the ongoing war in Ukraine.

Science is clear that reducing dependence on fossil fuels is an absolute must to resolve the climate and energy crises the world is facing today. It is therefore fundamental for public money commitments to signpost the path for the clean energy transition.

The EPT network stays committed to making the case for a transition away from fossil fuels to clean energy. While public scrutiny always focuses on the new and amended policies, it is important not to lose sight of old measures (some are over a century old) that entrench emission-intensive technologies and stall the clean energy transition. The EPT project now takes a pause to merge its data with the information on the “pre-Covid19” fossil fuel subsidies captured in a sister registry, the Fossil Fuel Subsidy Tracker, and then resume the tracking of new and amended energy policies from 2022 onwards.