World’s Largest Economies Are Still Spending Big On Oil & Gas

Spending on oil and gas, and coal is still higher among members of G20 than spending on renewable energy, a data update from the Energy Policy Tracker has revealed. Across the group, since the start of the pandemic, governments had pledged at least $160.95 billion in fossil fuel investments, versus $123.75 billion in renewable energy investment, the tracker, which updates government spending data on energy every week, said. This translates into $35.10 per capita in oil and gas spending, and $26.99 per capita for cleaner energy spending.

Most of the so-called unconditional fossil fuel investment was on oil and gas, unsurprisingly, with just $10.20 billion of the total allocated for coal. While this may sound like ten billion dollars too much to spend on the most polluting fossil fuel, G20 governments also allocated $38.44 billion on unconditional renewable energy. This was, however, the smaller portion of the total renewable energy spending; the bulk was pledged for so-called clean conditional energy, the Energy Policy Tracker said.

The tracker defines clean conditional policies as those that “are stated to support the transition away from fossil fuels, but unspecific about the implementation of appropriate environmental safeguards. Examples include: large-hydropower; rail public transport and electric vehicles (electric cars, bicycles, scooters, boats etc) using multiple energy types.”

This means that G20 members are spending—and planning to spend more on the electrification of transport than on boosting renewable energy capacity to produce the power required for this electrification drive.

On the other hand, the 19 countries and the European Union that make up G20 plan to spend most of their fossil fuel money on unconditional oil and gas—this means investment in the production and consumption of oil and gas “without any climate targets or additional pollution reduction requirements,” as the tracker puts it.This doesn’t look too well in the context of the climate change narrative but, of course, there are marked differences in spending priorities among G20 governments.

The European Union is among the best performers here: the bloc earlier this week agreed on a historic post-crisis economic recovery program that heavily features green energy. Of the total $2.1 billion that the EU approved for its 2021-2027 budget—including the Covid-19 recovery fund—almost a third will be spent on climate change-related projects, in line with the EU’s net zero plans for the period to 2050. In absolute terms, this translates into $572 billion on green policies and initiatives.

Outside the European Union, China has made strong policy commitments for conditional clean energy and a lot lower commitments for unconditional fossil fuels. The country has pledged some $27.23 billion for conditional clean energy and just $3.99 billion to unconditional fossil fuels. This is unsurprising given China’s place as top renewable energy spender even if this approach has come back to haunt Beijing with a $42-billion unpaid renewable energy subsidy bill.

The United States appears to be the biggest spender on unconditional oil and gas: most of its policy commitments since the start of the crisis are in this area, totalling $68.12 billion, versus $26.91 billion for clean conditional policies. Again, this is hardly a surprise with a federal government that has prioritized the country’s energy security and even dominance.

Outside Europe and North America, G20 members are spending on fossil fuels over anything else with the marked exception of Brazil, which has made commitments on clean energy and what the Energy Policy Tracker calls “other energy”, which includes things like nuclear and polluting biomass and biofuels.

Meanwhile, the pressure against the oil and gas industry continues in the form of an investor outflow. In the U.S., no less, several universities have sworn off oil and gas investments, according to a recent Wall Street Journal report. In Europe, none other than the Vatican joined the anti-fossil fuels crowd with the pope personally advising Catholics to stop investing in oil and gas.

The discrepancy between this pressure and G20 governments’ energy policy plans suggests energy security is still a priority over the source of the energy that provides this security. For now, it seems, for most G20 members, oil and gas are better at providing the security.