Major G20 economies are putting net-zero goals at risk by favouring fossil fuels over the energy transition in Covid stimulus packages, with the UK in particular at a “fork in the road” between a polluting or decarbonised future, claims a new study

The report by global technology group Wartsila is the latest to find a gap between the financial support offered to various sectors under national plans to recover from the pandemic, and warned this could “lock in” fossils to their energy systems.

The study Aligning Stimulus with Energy Transformation references data compiled by research alliance which shows a total of some $420bn has been pledged by G20 nations in support of a range of energy categories since the start of the Covid-19 pandemic in early 2020.

Broken down into areas of support the live tracker data shows that, as of 4 November, G20 governments had allocated at least $234bn in oil, gas and coal support, compared to $146bn for clean energy and $40bn to other energy sources.

Wartsila warned the measures taken to rebuild from the impact of the pandemic are missing the opportunity to create new green jobs and to accelerate the transition towards a flexible, renewable-powered global economy.

“Across the G20 countries, the stimulus ‘scales’ are strongly weighted to support legacy inflexible power systems, despite the agenda for rapid decarbonisation that’s underway worldwide,” said Sushil Purohit, Wartsila’s energy business president. “Some 54% of the support has been pledged to fossil fuels against 36% to clean energy.”

Among poorly-performing G20 nations, Wartsila warned the UK over its high levels of support granted to fossil fuels and said the country is not in line with its target of a 57% reduction in greenhouse gas by 2030 against1990 levels, or its longer-term commitment to net-zero by 2050.

UK net-zero warning

The report claimed that as of September some $5bn (£3.8bn) of UK stimulus commitment had been allocated to support fossil fuel energy, compared to only $158m (£121m) for clean power generation.

“In the UK and across the G20 as a whole, the stimulus ‘scales’ are too heavily weighted towards legacy fossil-fuel powered systems, despite the agenda for rapid decarbonisation that’s underway worldwide,” said Ville Rimali, growth and development director at Wartsila Energy.

“The UK energy system is at a fork in the road. The current road could lock-in unnecessary fossil fuels, create 60% fewer jobs and miss the UK’s net-zero target.”

The Wartsila report also highlights that out of $100bn of energy stimulus funds so far allocated in the US “a disproportionate amount” of over 70% has been allocated to “legacy fossil fuels” compared to less than 30% going to clean energy.

Switching energy support towards renewables could result in over 500,000 new US renewables jobs being created, some 175% more than if the money was invested in fossil fuels-based energy systems, says the report.

US president-elect Joe Biden’s Build Back Better plan promises to spend around $2 trillion on clean energy development over his four years in office. The plan will set the country’s first-ever clean energy mandate for grid electricity, making it carbon-free by 2035, and will also spur the installation of millions of solar modules and tens of thousands of wind turbines on land and offshore, according to his campaign.

“In the US and UK – it’s clear that both countries stand at the brink of a clean energy revolution, that could provide a blueprint for other economies to follow. Refocusing stimulus towards renewable and flexible energy would accelerate this shift, creating jobs and cutting emissions,” Purohit said.

The latest study backs up research cited mid-year by UN secretary general Antonio Manuel de Oliveira, which showed the governments of some G20 nations continuing to throw “lifelines” to fossil fuels which received twice as much financial support as clean energy from early Covid-19 recovery packages.

That was further underlined by a Christian Aid study in October that claimed the bias to fossils is leaving developing nations to “restart on coal”.