According to the latest update from the IEA’s Government Energy Spending Tracker, $130 billion was announced for clean energy investment over the past six months. Although this marks the slowest growth period since 2020, the deceleration is considered temporary, as several nations—including Australia, Brazil, Canada, the European Union, and Japan—are currently deliberating additional policy measures. Government budgets are playing a pivotal role in the rapid expansion of clean energy investment and the scaling of supply chains for clean technologies. These budgets are set to drive both sectors to new heights in the coming years, particularly by providing incentives for clean technology manufacturers, which currently have a total estimated value of $90 billion.

Concurrently, governments have increased funding to address the immediate impact of soaring energy prices on consumers. Since the onset of the global energy crisis in 2022, over $900 billion has been allocated to short-term consumer relief measures, in addition to existing subsidies. Approximately 30% of this total was announced within the last six months.

Government interventions have been instrumental in mitigating price hikes for consumers; however, the energy crisis continues to strain household finances. According to IEA data covering 12 countries—representing nearly 60% of the global population—the average household spending on energy in 2022 slightly outpaced wage growth. On average, households in major economies spent an additional 3% to 7% of their income on energy for heating, cooling, and cooking. This represents a significant portion of income; nevertheless, government support in most major economies successfully kept net energy expenditures below 1% of total household income.

In contrast, consumers in developing nations have experienced more severe impacts, as fuel and energy costs, alongside food prices, accounted for the largest increase in household expenses in 2022. Without government intervention, these prices would have escalated even further. In Indonesia, for example, household energy expenditures would have tripled in 2022 without state support.

Early 2023 data indicates a slowdown in wholesale energy prices, but retail prices are unlikely to decrease rapidly. High energy prices have made clean energy technologies, such as solar power, more cost-competitive. This is particularly evident in the record-breaking sales of electric vehicles (EVs) and heat pumps in 2022. Should fossil fuel prices remain high, the transition toward a new economy driven by clean energy—such as solar and wind—will likely accelerate.

Source: www.iea.org/news