The global energy system is a sprawling network of power plants, solar farms, dams, transmission lines, pipelines, ports, wells, and many other forms of infrastructure. Building and maintaining such a system requires massive ongoing investments. In 2023 a record USD 2.8 trillion was spent to replace and expand the world’s energy infrastructure.1
Finance for new energy investment comes from public and private sources. The Public Finance for Energy Database tracks the public side of the ledger.2 That project tracks G20 country bilateral finance institutions and the largest multilateral development banks (MDBs).3 Finance is classified as “fossil fuel,” “clean,” and “other.” The “other” category includes non-fossil energy sources that can significantly impact the environment and human populations, such as large hydropower (over 30 MW), biofuels, biomass, nuclear power, and waste-to-energy.4
All public sources provided about USD 1.3 trillion of financial support for energy projects from 2013 to 2022. Fossil fuel projects received 56% of that support followed by other (24%) and clean (20%) energy projects. The share of total annual finance directed at clean energy roughly tripled between 2013 (12%) and 2021 (39%), before declining sharply in 2022. Total public finance for energy declined from about USD 134 billion in 2013 to USD 105 billion in 2022.
Fossil fuel projects funded by public finance are concentrated in North America, South Asia, and the Middle East. Much of that support goes to upstream (extraction), midstream (transportation), and downstream (refining) projects in countries with large resource endowments such as the United States, Canada, and Russia. Japan has negligible oil and gas resources but substantial investments in natural gas power plants and liquified natural gas (LNG) infrastructure. There is very little public finance for fossil fuel projects in Europe.
Clean energy projects supported by public energy finance have a much wider geographic distribution than fossil fuels, partly due to the distributed nature of wind and solar energy and the well-established effectiveness of energy efficiency technologies. At least a dozen countries in Europe alone recorded more than one billion dollars in public clean energy finance from 2013 to 2022. Brazil was the leading location of publicly financed clean energy projects, mainly to develop wind and solar power.
Clean energy projects in India received more than USD 15 billion from 2013 to 2022 for demand-side energy efficiency, grid-connected rooftop solar, utility-scale wind and solar energy, electricity transmission, and energy storage.
Tracking the sources and recipients of funding reveals the priorities of lenders and countries investing in energy infrastructure. The largest supporters of clean energy from 2020-2020 were the European Investment Bank (EIB), the World Bank Group, Germany, Brazil, France, and the European Bank for Reconstruction and Development (EBRD). The EIB alone accounted for 28% of global public finance for clean energy in that period.
Korea and Canada were the second and third largest sources of public finance for energy from 2020 to 2022, and that support was skewed towards fossil fuels. The Korea Development Bank and the Export-Import Bank of Korea invested heavily in liquified natural gas (LNG) terminals and natural gas power plants worldwide, including Australia, the United Kingdom, the United States, Indonesia, Taiwan, and South Korea. Canada’s export credit agency emphasized upstream oil and gas development in Canada, the United States, Mexico, and Argentina.
The United States provided about USD 5.8 billion in public finance for energy from 2020 to 2022. Major lenders included the Export-Import Bank of the United States, the International Development Finance Corporation, and the Overseas Private Investment Corporation. About 70 percent of the support was directed at oil and gas projects in Mozambique, Oman, Iraq, Mexico, India, Argentina, and other countries. That funding supported natural gas production and processing, pipeline transmission, and liquefaction.
Public finance for coal was about USD 5.8 billion from 2020 to 2022, just five percent of support for all energy. China sourced 43% of the total funding for coal followed by South Korea (33%) and Japan (15%). China’s support for coal prioritized power plants in Indonesia, Pakistan, and Vietnam.
Very large energy projects account for the majority of total public finance. The Public Finance for Energy Database has more than 1000 projects in 2022. Export Development Canada, that country’s export credit agency, guaranteed USD 8.8 billion in financing to Trans Mountain. This pipeline company transports oil extracted from oil sands in Alberta to refineries and export terminals on the West Coast. That project alone accounted for 8 percent of global public energy finance in 2022. About one-third of all projects received 90% of all public finance for energy in 2022.
1 International Energy Agency, “World Energy Investment 2023, Paris https://www.iea.org/reports/world-energy-investment-2023.
2 Oil Change International, “Public Finance for Energy Database”, accessed May 17, 2024, https://energyfinance.org/#/data. The database considers an export credit agency, development finance institution, or multilateral development bank to be in scope as a ‘public finance institution’ when the national government(s) hold more than 50% of the ownership stakes and where there is a clear policy mandate that drives decisions beyond solely commercial.
3 The G20 is made up of 19 countries (Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Saudi Arabia, South Africa, Russia, Türkiye, UK and USA) and two regional bodies: the African Union and the European Union. The members of the G20 represent around 85% of the world’s GDP, more than 75% of world trade, and around two-thirds of the world’s population. Source: https://www.g20.org/en/about-the-g20.
4 Fossil fuels include the oil, fossil gas, and coal sectors across their whole life cycle: exploration and appraisal, development, extraction, preparation, transport, power plant construction and operation, distribution, decommissioning, fossil fuel abatement, and carbon capture and storage (CCS). It also includes energy efficiency projects where the energy source(s) involved are primarily fossil fuels. Clean includes energy that is both low-carbon and has negligible impacts on the environment and human populations if implemented with appropriate safeguards. This includes solar, wind, tidal, geothermal, and small-scale hydro. This classification also includes energy efficiency projects where the energy source(s) involved are not primarily fossil fuels. Source: https://energyfinance.org/#/about.