How clean energy transitions can help kick-start economies

The Covid-19 pandemic has created an unprecedented global emergency around the world, with governments focused on protecting the health, safety and well-being of their citizens. Countries are in lockdown, and financial and economic safeguards are being erected to prevent even greater turmoil. Looking further forwards, the world faces an enormous task getting people back to work and reigniting the engines of economic growth.

Around the world, leaders are getting ready now, drawing up massive economic stimulus packages. Some of these plans will provide short-term boosts, others will shape infrastructure for decades to come. We believe that by making clean energy an integral part of their plans, governments can deliver jobs and economic growth while also ensuring that their energy systems are modernised, more resilient and less polluting. 

Global confinement has halted travel and transport, causing a severe shock to energy systems. As a result, it is likely that global carbon dioxide emissions will decline this year. But that will not be anything to celebrate. What matters is putting emissions into structural decline. For that, we will need clean energy to play a central role in recovery efforts. This is an inter-generational opportunity, where smart economic planning can enable us to put the world on track to meet our climate commitments, including the Paris Agreement. We need to make the key pillars of energy transitions – such as energy efficiency, renewables and battery storage – top priorities for creating jobs, improving critical infrastructure and driving innovation.

To make meaningful progress on clean energy transitions, we have identifed three important recovery actions:

1. Ambitious agenda setting for job creation and climate change goals. Policy makers should pursue synergies between job creation and climate action to drive economic recovery. Modernising energy systems can make a concrete contribution to job creation and economic growth while also protecting the climate.
2. Public sector leadership on investing in clean energy. IEA analysis shows that governments directly or indirectly drive more than 70% of global energy investments. At this time of crisis, their actions matter more than ever. Policy settings can actively steer energy-related investments onto a more sustainable path.
3. Making energy efficiency, renewables and battery storage central to economic recovery. Stimulus programmes in these dynamic energy industries should be prioritised to support existing workforces, create new jobs and drive reductions in emissions.

As in many other countries in Europe and beyond, Denmark’s clean energy transition experience bears testimony to the potential of environmentally sustainable growth: addressing climate change while enabling the economy to expand. We can draw on these experiences in this time of crisis — it is possible to achieve cost-efficient and inclusive clean energy transitions.

Experience has proven the effectiveness of including energy efficiency in stimulus programmes. It improves competitiveness, lowers energy bills and creates jobs quickly. Energy efficiency measures such as retrofitting buildings and technology upgrade programmes can support labour-intensive activity in key sectors such as construction and manufacturing, and underpin productivity gains through innovation and infrastructure.

Renewables such as wind power and solar PV form a key pillar of clean energy transitions. They have shown how, in the right conditions, new low-carbon technologies can grow rapidly to become a dynamic and innovative part of forward-looking economies. When designing stimulus packages, governments should bear in mind the structural benefits that renewables can bring in terms of economic development and job creation while also reducing emissions and fostering technology innovation.

To support timely action in these areas, we have invited ministers, heads of international organisations and industry leaders to discuss how governments can make clean energy a central part of national plans for post-crisis economic growth.

Our virtual ministerial roundtable, which will take place on 24 April, will focus on recovery packages, with special attention on energy efficiency and renewable energy. Those invited are all linked to the IEA’s Clean Energy Transitions Programme. This will be the first of many forums in the coming weeks and months to exchange ideas, reflect and drive strategic action. Some of the leading participants include:

• H.E. Mr Dan Jørgensen, Minister for Climate, Energy and Utilities, Denmark (co-host)
• Dr Fatih Birol, Executive Director, International Energy Agency (co-host)
• Ms Amina Mohammed, Deputy Secretary General, United Nations
• H.E. Mr Frans Timmermans, Executive Vice-President, European Commission
• H.E. Ms Simonetta Sommaruga, President of Switzerland
• Hon. Mr Seamus O’Regan, Minister of Natural Resources, Canada
• H.E. Ms Elisabeth Borne, Minister for an Ecological and Inclusive Transition, France
• H.E. Mr R.K. Singh, Minister of Power, India
• H.E. Mr Arifin Tasrif, Minister of Energy and Mineral Resources, Indonesia
• Hon. Ms Megan Woods, Minister of Energy and Resources, New Zealand
• H.E. Mr Anders Ygeman, Minister of Energy and Digital Development, Sweden
• Rt Hon Mr Kwasi Kwarteng MP, Minister of State for Business, Energy and Industrial Strategy, United Kingdom
• H.E. Ms Kadri Simson, Commissioner for Energy, European Commission
• Mr Kimmo Tiilikainen, State Secretary, Ministry of Economic Affairs and Employment, Finland
• Mr Andreas Feicht, State Secretary for Energy, Federal Ministry for Economic Affairs and Energy, Germany
• Ms Alessandra Todde, State Secretary for Economic Development, Italy
• H.E. Mr Alex Robson, Ambassador, Permanent Delegation of Australia to the Organisation for Economic Co-operation and Development
• Mr Sandor Gaastra, Director-General Climate and Energy, Ministry of Economic Affairs and Climate Policy, the Netherlands 
• Mr Francesco La Camera, Director-General, International Renewable Energy Agency
• Ms Sharan Burrow, General Secretary, International Trade Union Confederation
• Mr Kim Fausing, CEO, Danfoss
• Mr Gurdeep Singh, Chairman and Managing Director, NTPC
• Mr Jean-Pascal Tricoire, CEO, Schneider Electric

It is our shared hope that this initiative will provide an opportunity for energy ministers to discuss the current situation, reignite momentum for clean energy transitions and share best policies and practices.