Seismic shifts are underway in the world energy system. Low-carbon fuels, energy efficiency, and energy storage are expanding at record rates. At the same time, fossil fuels still dominate current energy use and receive massive ongoing new investments. Cost-lowering innovation is a common feature across many types of energy systems.
Is energy investment in innovation aligned with the need to reduce greenhouse gas emissions and to accelerate equitable access to clean energy services? There are many approaches to answering this question. Global and national energy research, development, and demonstration (RD&D) investments represent one metric of innovation priorities. Public RD&D investments are an indicator of government effort and intention to shape a country’s energy systems in the future.1
The Climate Policy Lab at Tufts University maintains a database of government annual expenditures by individual countries since 2000 in eight technological categories: energy efficiency, fossil fuels, renewable energy sources, nuclear, hydrogen and fuel cells, other power and storage technologies, other cross-cutting technologies, and unallocated.2 In this chart, countries that have incomplete data for one or more categories or years are excluded, including China, India, and several other large countries. These countries are discussed below.
Taken as a whole, global energy RD&D increased from about $US13 billion in 2000 to $US35 billion in 2019, the most recent year for which complete country coverage is available. Important shifts are visible. Since the mid-2000s, renewable clean energy and energy efficiency have claimed larger shares of public energy investment, while nuclear energy and fossil fuels have declined in relative terms.
Country portfolios of energy RD&D show a few dramatically different priorities. Ireland’s Renewable Energy Directive has spurred the rapid expansion of wind energy to nearly one-third of electricity generation in 2021.3 Similarly, Spain has rapidly expanded its solar and wind electricity generation capacity. Sweden, Finland, and the Slovak Republic place heavy emphasis on energy efficiency. Countries with substantial domestic fossil fuel industries continue heavy relative investments in those sectors. Examples here include Norway, Canada, Estonia, Poland, and Australia.
Data for India and China were less available until relatively recently, but what we do know indicates that they are now major investors, especially in low-carbon energy. In recent years, India has heavily invested in nuclear power relative to renewables, while China was the world’s leading investor in renewables in 2019.
In many countries, governments create state-owned enterprises (SEOs), legal entities that participate in commercial energy activities on the government’s behalf. Notable SEOs include Saudi Aramco (gas and oil; Saudi Arabia), State Grid Corporation of China (electricity; China), Gazprom (gas and oil; Russia), and Areva S.A. (nuclear; France). Including the energy RD&D spending of SOEs significantly shifts the balance of total spending patterns. SOE spending is heavily weighted toward fossil and nuclear energy. China is the largest total public investor in the energy sector and India is the third largest total public investor in the energy sector when SEO expenditures are included.4
Another way to view a country’s commitment to energy RD&D is to scale expenditures by total economic activity as measured by Gross Domestic Product (GDP). Norway spends about US$1.1 on energy RD&D per US$1000 GDP. Turkey has the lowest value in the dataset at about US$0.04 per US$1000 GDP
1 Zhang, Fang, Kelly Sims Gallagher, Zdenka Myslikova, Easwaran Narassimhan, Rishikesh Ram Bhandary, and Ping Huang. “From Fossil to Low Carbon: The Evolution of Global Public Energy Innovation.” WIREs Climate Change 12, no. 6 (2021): e734. https://doi.org/10.1002/wcc.734.
2 Myslikova, Z., Gallagher, K. S., Zhang, F., Narassimhan, E., & Oh S. (2023). “Global Public Energy RD&D Expenditures Database.” Climate Policy Lab, The Fletcher School, Tufts University. Accessed March 16, 2023, https://www.climatepolicylab.org/rddmap
3 sustainable energy authority of Ireland, Accessed May 8, 2023, https://www.seai.ie/data-and-insights/seai-statistics/key-statistics/renewables/
4 Zhang et al. (2021) op. cit.