How much will renewable energy benefit from global stimulus packages?

This report is part of Renewables 2021

As of October 2021, governments around the world have mobilised almost USD 17 trillion in the form of rebates, grants, loans and tax incentives/exemptions to mitigate the effects of the Covid-19 crisis (IMF, 2021a). The majority of these measures are aimed primarily at providing relief to businesses, the public sector and consumers affected by the economic downturn arising from the Covid‑19 pandemic and to channel public money towards rebuilding economies around the world.

Approved government spending on clean energy reached USD 480 billion. The USD 45 billion allocated to renewables – including electricity, heat and fuels (biofuels, advanced biofuels and biogas) – accounted for about 9% of announced public spending on clean energy. The majority of global clean energy stimulus is expected to be spent over 2021-2023.



Encouraged by its job creation potential and low cost as a CO2 abatement technique, energy efficiency sector has received USD 144 billion, the greatest clean energy spending globally. The renovation of public and private buildings and energy efficiency investment in the industrial sector are the largest beneficiaries of the allocated spending. Depending on country-level regulations, renewable heat technologies can also benefit from spending allocated to energy efficiency. The second most supported sector is public transport (USD 94 billion), followed by low-emission vehicles and charging infrastructure (USD 79 billion). Investment in railways, mass/urban transit and walking/cycling infrastructure have so far received the largest portion of this funding, followed by EVs and alternative-fuel vehicles and their charging infrastructure. 

Global government clean energy spending by sector and technology allocated up to October 2021


Of the spending on low carbon power, we expect solar PV to receive the largest amount, accounting for almost half of low-carbon electricity spending (USD 24 billion) and split between utility-scale and distributed PV. This stimulus money will mostly support already developed markets in China, Korea and the European Union to further accelerate investments. Nuclear power has received around USD 9 billion in public spending, followed by offshore wind and onshore wind. Despite increasingly needed flexibility capabilities, dispatchable renewables including hydropower, geothermal and bioenergy received only USD 3.5 billion. Similarly, biogas and biofuels only received around USD 3 billion, despite their major contribution to decarbonisation of the hard-to-abate sectors such as aviation and heavy industry. Many governments consider low-carbon hydrogen to be the main fuel for decarbonising the hard-to-abate sectors. This is reflected in large public spending of about USD 30 billion allocated to hydrogen. However, uncertainty remains about whether this allocated spending will be for hydrogen produced from renewables or non-renewables.

As of October 2021, almost three quarters of public spending on clean energy was allocated in Europe, followed by the Asia Pacific region and North America. The share of renewables, including biofuels and renewable electricity, in overall clean energy spending ranged from 4% to almost 56% depending on the region. In Europe and North America, transport infrastructure and energy efficiency spending took priority over renewables. In Asia Pacific, focusing on reaching ambitious renewables targets have led to a higher renewable share in overall clean energy spending, especially in China and Korea. 

Government clean energy approved spending by region and share of renewables allocated until October 2021


About USD 42 billion of approved public spending on renewable electricity could mobilise USD 380 billion of additional private investment if this spending attracts nine times more capital. However, the contribution of the private sector will highly depend on the effectiveness of policies and implementation measures to attract investment. This would result in the development of an additional 380 GW of renewable projects in the coming years, with solar PV providing over 90% of this upside potential. However, the IEA’s Sustainable Recovery Plan suggests an additional USD 800 billion investment in renewables is needed over 2021-2023. This requires not only increasing public spending but also mobilising additional private capital. 

Estimated renewable capacity additions resulting from approved government spending, depending on private financing leverage to be commissioned over 2021-2026


Focus on the EU Recovery and Resilience Facility

In addition to its long-term budget of EUR 1.2 trillion, the European Union announced in 2020 the Next Generation EU stimulus programme worth EUR 800 billion to support recovery in member countries in the form of grants and loans to be allocated over 2021-23. The Recovery and Resilience Facility (RRF) accounts for about EUR 724 billion of the total spending allocation in the Next Generation EU programme. Climate-related spending must account for at least 37% of RRF funding used in member states. From March to September 2021, 22 member countries proposed their spending plans, with 18 of them receiving approved from the European Union.

Overall, EU member countries requested over EUR 460 billion, with two-thirds in the form of grants. The climate-related part of their proposals was 41%, or USD 191 billion, higher than initial minimum target of 37%. While the majority of country plans include a climate-related spending share ranging around the average, Finland, Denmark, Austria and Luxembourg proposed to spend higher shares of 60% to 70%. Italy has requested the largest absolute amount of spending for clean energy at over EUR 70 billion, followed by Spain, Poland, France and Greece. These five countries account for almost 80% of all climate-related spending under the RRF facility. 

EU RFF funding allocation by country and share of clean energy as of September 2021


Energy efficiency and public transport together account for more than half of the overall climate budget under the RFF, followed by renewable electricity and “green” hydrogen. Overall renewables including the electricity sector, biofuels, biogas and renewable heat are to receive about EUR 18 billion, less than 10% of overall climate-related EU public spending. Based on country proposals, we estimate that the majority of the renewables spending will be used for distributed PV applications followed by offshore wind, utility-scale solar PV and onshore wind. Outside the electricity sector, spending on biogas remains a policy priority in some countries to decarbonise existing gas infrastructure. The spending allocation for biofuels (including both conventional and advanced biofuels) remains despite the European Union’s Net Zero by 2050 goal, where biofuels play a key role in decarbonising hard-to-abate sectors. Renewable heat received the lowest spending allocation among all climate-related technologies, although part of the energy efficiency stimulus may be spent towards renewable heat in buildings and industry. 

EU RFF fund allocation by sector as of September 2021


Spending proposals for specific renewable technologies are geographically concentrated among two to three countries. For distributed PV, self-consumption programmes in Italy and Spain are expected to dominate, while Poland has requested funding for development of its first-ever offshore wind projects and associated infrastructure. For utility-scale PV and onshore wind, Greece’s policy on island electrification and Italy’s agrovoltaics programme will receive the majority of the EU spending. For renewable heat and biofuels, Austria and France respectively support national programmes on the exchange of oil and gas heating systems with renewable heat options and the production of advanced biofuels. 

EU RFF fund allocation by renewable technology or fuel, as of September 2021