Government policies continue to play a crucial role in accelerating the adoption and deployment of renewable energy technologies, particularly in sectors other than power generation. Policies also continue to be critical for achieving renewable energy cost reductions and innovation.1 By the end of 2020, nearly all countries worldwide had in place renewable energy support policies, although with varying degrees of ambition.2 (→See Figure 10 and Table 6.) In addition, renewable energy deployment continued to expand outside of government policies in the form of corporate commitments to renewables and utility-led activities. This was driven by market-based factors such as corporate action on climate change and the declining costs of renewable electricity.3 (→See Feature chapter.)
FIGURE 10
Note: Figure does not show all policy types in use. In many cases countries have enacted additional fiscal incentives or public finance mechanisms to support renewable energy. A country is considered to have a policy (and is counted a single time) when it has at least one national or state/provincial-level policy in place. Power policies include feed-in tariffs (FITs) / feed-in premiums, tendering, net metering and renewable portfolio standards. Heating and cooling policies include solar heat obligations, technology-neutral renewable heat obligations and renewable heat FITs. Transport policies include biodiesel obligations/mandates, ethanol obligations/mandates and non-blend mandates. For more information, see Table 6 in this chapter and Reference Tables R8-R10 in GSR2021 Data Pack.
Source: REN21 Policy Database.
The year 2020 was critical for assessing progress on renewable energy targets. Worldwide, 165 countries had in place targets to increase uptake of renewables in various sectors by year’s end.4 Most of these targets were for the power sector, followed by targets for total final energy consumption, heating and cooling, and transport. However, success in actually being on track to meet the 2020 targets varied widely: overall, some 80 targets were achieved, while the majority (134) were not yet achieved according to the latest data available (ranging from 2017 to 2020). While some countries were close to achieving their targets, others were far from being on track. Moreover, as countries’ 2020 targets were coming to term at the end of the year, as many as 30 countries had not yet set new targets for future years (compared to 67 that had). Many of the achieved targets were for power, heating and cooling, and total final energy consumption, while very few were in the transport sector. (→ See Figure 11 and Reference Tables R3-R8 in GSR 2021 Data Pack i.)
FIGURE 11.
Note: Figure includes only countries with targets in these sectors that are for a specific share from renewable sources by a specific year, and does not include countries with other types of targets in these sectors.
Source: REN21 Policy Database. See Reference Tables R3-6 in GSR 2021 Data Pack.
Continuing a trend of the past decade – and despite the COVID-19 crisis – policy support for renewables generally remained strong throughout 2020. In some countries, economic recovery policies and funding packages related to the pandemic included explicit support for renewables, although, overall, far more support was allocated to fossil fuels.5 (→ See Sidebars 3 and 4.) While the global health and economic disruptions affected the suite of renewable energy policies implemented during the year, such measures also evolved in response to greater action on climate change, the falling costs of renewables, evolving grid and system integration demands, and the changing needs and realities of different jurisdictions.
In jurisdictions with high shares of installed renewable energy, decision makers typically focused policy development on ensuring that support for renewables was cost effective, and on the technical and market integration of renewables. (→ See Systems Integration section in this chapter.) In less-mature renewable energy markets and in some developing and emerging economies, policy efforts prioritised outcomes such as boosting renewable energy capacity and generation to meet demand, promoting energy security and providing increased access to energy.6 (→ See Distributed Renewables chapter.)
Policies to advance the production and use of renewables can be targeted at any and all end-use sectors, including buildings, industry, transport and electricity generation. Most renewable energy policy in 2020 continued to focus on a single sector, although at least five countries unveiled comprehensive climate change policies that included support for renewables across multiple sectors. Trade policy also continued to have an impact on the production, exchange and development of renewable energy products, as well as on the demand for renewables within specific countries.7 (→ See Box 4.)
A significant amount of renewable energy policy making continued to occur at the municipal level. However, this chapter covers mainly policy enacted at the regional, national and state/provincial levels of governance. Municipal policy is discussed in detail in the REN21 Renewables in Cities Global Status Reportii.
Sidebar 3. Renewable Energy in COVID-19 Stimulus Packages
In response to the COVID-19 crisis, governments around the world announced more than USD 12 trillion in financial stimulus, including at least USD 732.5 billion in energy-related support. Although some stimulus packages included incentives for renewables, as of April 2021 this comprised only around USD 264 billion of the total amount provided by governments globally, compared to more than USD 309 billion in fossil fuel stimulus. (→ See Figure 49 in Investment chapter.) Direct support for coal included India’s USD 6.75 billion coal infrastructure support package and the Republic of Korea’s USD 2.5 billion bailout of Doosan Heavy Industries, a coal plant manufacturer. Direct support for oil and gas included USD 4.4 billion in loans and loan guarantees to a Canadian pipeline and GBP 1.3 billion (USD 1.7 billion) in low-interest loans to oil and gas companies in the United Kingdom.
Nevertheless, examples of “green recovery” efforts did emerge. At a regional level, around 30% of the European Union’s (EU) EUR 750 billion (USD 921 billion) COVID-19 stimulus package was dedicated to “clean recovery” and renewables, including renewable electricity generation, energy retrofits of buildings, renewable heat, renewable hydrogen and electric vehicles (EVs)i. China, India and the Republic of Korea also committed to renewable energy investments, although those countries also supported coal in their recovery plans. Colombia’s plan included raising COP 16 billion (USD 4.6 million) to accelerate 27 renewable energy and related transmission projects.
In the power sector, governments provided around USD 95 billion in response to COVID-19. This was largely to ensure the continuation of services and to reduce consumers’ bill burdens rather than to incentivise renewablesii, although several countries provided funds for new renewable power capacity. Israel’s recovery plan included a commitment of ILS 6.5 billion (USD 2 billion) to build 2 gigawatts (GW) of new solar PV capacity. Nigeria’s stimulus plan allocated around USD 620 million for a programme to install solar PV home systems for 5 million households. In the United States, the USD 900 billion relief package included extensions of the production and investment tax credits for solar PV and onshore wind power, a new tax credit for offshore wind power, USD 1.7 billion for low-income homeowners to install renewable energy, and USD 4 billion in research and development (R&D) funding for solar power, wind power, hydropower and geothermal energy.
In the buildings and industry sectors, the largest share of energy-related stimulus aid was aimed at spurring investments in renewable heat in buildings and raising the energy efficiency of existing buildings. France’s COVID-19 stimulus package included EUR 7 billion (USD 8.6 billion) to support building renovations – including those encouraging renewable heat – as part of a wider target to renovate the country’s entire building stock by 2050.
In the transport sector, aviation was the largest stimulus recipient, but only three countries – Austria, France and Sweden – included “green” conditions for aviation stimulusiii. At least four countries provided COVID-19 relief for electric transport and hydrogen for transport, although not necessarily linked to renewable energy. The Republic of Korea’s recovery package included KRW 2.6 trillion (USD 2.4 billion) in support of EVs and hydrogen cars. France’s plan allocated EUR 11 billion (USD 13.5 billion) for EVs, including support for charging stations. Germany’s stimulus package included EUR 5.9 billion (USD 7.3 billion) in subsidies for EVs and charging infrastructure as well as EUR 7 billion (USD 8.6 billion) for renewable hydrogen for decarbonising heavy transport and industry. Part of Spain’s EUR 3.8 billion (USD 4.6 billion) aid package for the auto industry included measures to electrify public transport, a target to increase the number of EV charging points to 50,000 by 2023 and 800,000 by 2040, funding for EV charging and subsidies for purchasing low-emission cars.
iMember States are expected to invest funds in the seven priority areas of: clean energy technologies; energy-efficient building renovations; sustainable transport; broadband roll-out; digitalisation of public administration; cloud computing capacities; and mainstreaming digital skills into education systems. In line with the European Green Deal, EU countries have agreed to explicitly include clean energy transitions at the heart of their economic recovery.i
iiExcluding the EU plan for economic recovery, new renewable electricity plants, mostly wind and solar PV, received only around USD 10 billion from announced stimulus packages.ii
iiiAustria required Austrian Airlines to abolish air routes that can be reached by train in far fewer than three hours and to commit to additional emission reduction goals, France’s USD 7.7 billion support for Air France required 50% emission reduction and a minimum of 2% renewable fuel by 2030, and Sweden imposed conditions of 25% emission reduction by 2025 on Scandinavian Airlines.iii
Source: See endnote 5 for this chapter.
BOX 4. Trade Policy, Local Content Requirements and Renewables
In 2020, several jurisdictions unveiled policies to stimulate the local production of renewable energy equipment. In Africa, Mali exempted equipment such as solar panels, wind turbine blades and pump turbines from paying value-added tax (VAT). Burkina Faso launched a Solar Cluster initiative to establish a domestic solar PV industry by offering long-term financial backing for solar PV projects and providing networking and training opportunities for the country’s solar industry. Uganda’s revised draft National Energy Policy committed to formulating innovative financing mechanisms for geothermal and solar PV through different financial interventions, including income tax deductions, exemptions from VAT and customs tax, and accelerated depreciation tax incentives.
India put forward an expedited manufacturing plan to incentivise domestic solar cell manufacturing capacity and planned to impose new tariffs of 40% on imports of solar modules and 25% on solar cells starting in April 2022. The Indian government also approved a “production-linked incentive” plan to enhance the country’s manufacturing capabilities and exports, including domestic high-efficiency solar PV module manufacturing and advanced chemistry cell batteries.
Turkey’s new regulations for solar panel imports (which require calculating the import duty on solar modules per kilogram rather than by square metre) are perceived to favour Turkish manufacturers of solar PV panels, as high-efficiency modules generally are heavier than they were a few years ago. Saudi Arabia announced a plan to increase local content in domestic renewable energy industry chains.
Other jurisdictions eased import requirements for renewable energy equipment in 2020. The Brazilian government introduced a measure to remove a 12% levy for some solar equipment (modules, inverters and trackers). The government of Bangladesh added EUR 200 million (USD 246 million) during the year to its Green Transformation Fund, which offers loans for the import of “environmentally friendly” products and energy efficiency components from Europe. In Senegal, to accelerate the electrification of rural areas, the government exempted equipmenti for the production of solar PV power from the VAT.
iThe exempted products include solar panels, inverters, solar thermal collectors, batteries, solar lamp kits, solar water heaters and charge regulators. Packages comprising a battery, solar panel, and a lantern or a solar panel, a water pump and controller also are included among the VAT-exempted products.i
Source: See endnote 7 for this chapter.
