Governments are setting renewable energy targets and implementing policies that indirectly promote the uptake of renewables, including climate change policies, economic and green recovery plans, fossil fuel phase-outs and targets for net zero greenhouse gas emissions. Such policies can impact the economy on both the demand and supply sides. Recent events such as the Russian Federation's invasion of Ukraine and rising inflation have led policy makers to prioritise energy security, resulting in comprehensive policies such as the RePowerEU package and the Inflation Reduction Act. These measures create more favourable market conditions for renewables, driving innovation, reducing costs and emissions, providing economic opportunities and enhancing global energy security.

Renewable energy targets, coupled with legislation and committed funding for implementation, illustrate the level of ambition that countries have to accelerate the energy transition. By the end of 2022, 128 countries had in place economy-wide targets for renewable energy, although only 31 countries had targets for 100% renewables, most of them for the year 2050. ¹²¹ (See Figure 7.)

Thirteen countries revised or announced new economy-wide targets for renewables in 2022, with new targets announced in seven countries (Azerbaijan, Bhutan, Egypt, Jamaica, New Zealand, the Federated States of Micronesia and Vietnam) and targets revised in five countries (Angola, China, Israel, Jordan and Portugal). ¹²² Sector-specific renewable energy targets were aimed mainly at the power sector, with targets announced in 133 countries and 41 sub-national jurisdictions. ¹²³

Policies for Renewables in Energy Demand

On the demand side, several notable policy trends and developments occurred over the year. In buildings, the global focus on renewable heating and cooling was supported through national target-setting and specific support policies. The EU's Renewable Energy Directive set a goal for Member States to increase the share of renewables in heating and cooling annually. ¹²⁴ The European Parliament even proposed raising this target to 2.5%. ¹²⁵

Many countries also introduced technology-based targets for renewables in buildings. Germany, Ireland, and the United Kingdom, for example, announced national targets for heat pump installations that are significantly higher than previous years. ¹²⁶ China implemented its Building Energy Efficiency and Green Building Development Plan, which aims for substantial solar PV and geothermal heat coverage. ¹²⁷ (See GSR 2023 Renewables in Energy Demand Modules: Buildings in Focus.)

FIGURE 7.

Countries with Economy-wide Renewable Energy Targets, by Sector and Targeted Share, 2022

Policies related to the industry sector have focused primarily on energy efficiency and energy management rather than on renewable energy requirements. However, progress has been made in promoting renewable heat, carbon pricing mechanisms and the policy attention given to renewable hydrogen. ¹²⁸ Factors driving these policies include energy crises, energy security concerns, net zero commitments and the rise of the hydrogen economy. ¹²⁹ Despite these developments, the lack of comprehensive national-level data has hindered effective policy design for renewables in the industry sector. (See GSR 2023 Renewables in Energy Demand Modules: Industry in Focus.)

Policies for the transport sector aim to increase the use of renewable energy, with a focus on biofuels and electric vehicles. However, the emphasis is more on decarbonisation than on the penetration of renewables. In 2022, a few countries revised their targets for the share of renewables in transport: Portugal and the Netherlands raised their targets, while Italy lowered its target. ¹³⁰

Biofuel blending mandates remain the most common policy for promoting renewable fuels in transport, although the number of new biofuel policies has remained stagnant. ¹³¹ Electric vehicle incentives and targets have gained increasing interest. In the aviation, rail, and shipping sectors, there is a growing emphasis on sustainable aviation fuel (SAF) to decarbonise these industries. ¹³² The EU and the United States have implemented policies for SAF, including blending mandates and tax credits. ¹³³ (See GSR 2023 Renewables in Energy Demand Modules: Transport in Focus.)

Overall, policies promoting the uptake of renewables in agriculture have increased. Some governments have introduced targets, requiring a certain share of energy in the sector to come from renewable sources. Four countries – including Bangladesh, India, the Republic of Korea and Zambia – had renewable energy targets in agriculture by the end of 2022. ¹³⁴ Financial incentives such as subsidies, tax credits and funding programmes are the most common policies for renewables in agriculture. By the end of 2022, a total of 26 national and sub-national jurisdictions had renewable energy policies for agriculture, led by efforts in the United States, India and Bangladesh. ¹³⁵ (See GSR 2023 Renewables in Energy Demand Modules: Agriculture in Focus.)

Policies for Renewables in Energy Supply

Global energy policy has been shaped by the need for a reliable energy supply and accelerated decarbonisation efforts. Major policy developments in 2022 included the US Inflation Reduction Act, the EU's Fit for 55 and RePowerEU packages, Australia's Climate Change Bill, Japan's GX Green Transformation, and China's 14th Five-Year Plan. ¹³⁶ These policies reflect increased investments and spending on the energy transition.

Many jurisdictions have set renewable energy targets for electricity generation, with Bolivia, Chile, the EU and sub-national jurisdictions in Canada announcing new or revised targets. Solar and wind power have dominated technology-specific targets. ¹³⁷

Feed-in tariffs and premiums have been widely used to support renewables, with revisions and re-introductions in various countries. ¹³⁸ Net metering policies incentivise self-consumption and surplus electricity sale. Auctions and tenders have attracted private sector investments, and financial and fiscal policies, such as tax credits and incentives, have been implemented to promote renewables. However, adjustments to auctions and tenders have been challenging due to inflation and rising costs.

Among recent policies, the US Inflation Reduction Act stands out with substantial subsidies and tax credits, providing confidence to the market. ¹³⁹ Other jurisdictions, such as the EU, Canada, and South Africa, have introduced financial incentives to align with the US efforts. ¹⁴⁰ (See GSR 2023 Renewables in Energy Supply Module.)

Decarbonisation Policies

Renewable energy was at the heart of discussions at the 2022 United Nations Climate Change Conference (COP 27) in Sharm El-Sheikh, Egypt, and renewable-based energy systems are seen as the single most effective way to realise a net zero carbon world. ¹⁴¹ Through their Nationally Determined Contributions (NDCs) towards reducing emissions under the Paris Agreement, countries have established clear targets and commitments for reducing greenhouse gas emissions and are incentivised to invest in and prioritise the development of renewables. Such plans are crucial in efforts to keep global temperature rise below 2 degrees Celsius and highlight the critical role of renewables in the transition to a low-carbon economy.

Since the signing of the Paris Agreement, 194 Parties have submitted NDCs to the United Nations Framework Convention on Climate Change (UNFCCC), outlining their plans to reduce emissions and increase renewable energy uptake. ¹⁴² In 2022, 35 countries submitted updated NDCs, although not all countries include targets for the deployment of renewables in their NDCs. ¹⁴³ As of 2022, 183 Parties included renewable energy components in their NDCs, but only 143 of these had a quantified target. ¹⁴⁴

Policies aimed at decarbonisation indirectly promote the use of renewables and include targets for reducing greenhouse gas emissions, pledges for climate neutrality and policies for net zero emissions. As of May 2023, 146 countries had announced or adopted a net zero target. ¹⁴⁵ (See Figure 8.) The net zero target was included in a law in 26 countries and the EU, in a policy document in 47 countries, in discussion or proposed in 52 countries, and had a declaration or pledged in 15 countries. Renewable energy is crucial towards achieving new zero emissions, and 94 countries have both a net zero and an economy-wide renewable energy target. ¹⁴⁶

Six countries (Benin, Bhutan, Comoros, Gabon, Guyana and Suriname) declared that they had achieved their net zero targets as of 2022. In March, the Republic of Korea's Carbon Neutrality Bill and Green Growth Act for Climate Change entered into force, requiring the government to cut emissions 35% by 2030 and to reach net zero by 2050. ¹⁴⁷ However, as of December 2022 the UNFCCC reported only 57 submissions of long-term low-greenhouse gas emission development strategies, with 11 countries having submitted their strategies during the year (Argentina, Canada, the Gambia, Germany, India, Lithuania, the Russian Federation, Singapore, Thailand, Tunisia and Zimbabwe). ¹⁴⁸ Such strategies outline a country's long-term vision for decarbonising its energy system, reducing emissions and promoting renewable energy uptake. ¹⁴⁹

Carbon pricing policies put a price on carbon emissions to encourage a shift towards low-carbon technologies, thereby reducing greenhouse gas emissions. Adopted by governments and/or regional organisations, the policies can take the form of carbon taxes or cap-and-trade systems. They can help raise revenue for investments in renewables and other low-carbon technologies and provide incentives for companies to reduce their carbon footprints.

FIGURE 8.

Countries with Net Zero and Renewable Energy Targets, 2022

By early 2023, a total of 55 countries had either implemented or were considering carbon pricing policies. ¹⁵⁰ (See Figure 9.) Out of these, 24 countries had either implemented or were considering a carbon tax, while 21 countries had implemented or were considering an emission trading system (ETS). ¹⁵¹ A further 10 countries had both a carbon tax and an ETS in place or under consideration. ¹⁵² Two countries, Australia and Vietnam, had plans to implement an ETS at a later date. ¹⁵³ Among the 55 total countries, 37 had both a carbon pricing policy and either an existing or planned ban on fossil fuels in one or more sectors such as power, heating or transport. ¹⁵⁴ Out of these 37 countries, 19 also had set a net zero target. ¹⁵⁵

Only five countries (Australia, Austria, Indonesia, Montenegro and Uruguay) scheduled or implemented carbon pricing policies in 2022 and early 2023. ¹⁵⁶ In a notable breakthrough, the European Council and the European Parliament agreed in December 2022 to implement the EU Carbon Border Adjustment Mechanism, which will apply a carbon price on certain imported goods from countries that do not have carbon pricing policies. ¹⁵⁷

The EU is in talks to introduce the EU ETS 2, covering emission trading for buildings, road transport and smaller industries. ¹⁵⁸ The EU ETS 2 is aimed at regulating fuel suppliers upstream, potentially starting in 2027, and would include a Social Climate Fund to support vulnerable households and microenterprises. ¹⁵⁹ The scheme would update the EU ETS, the world's oldest and largest carbon pricing system, which is in its fourth phase since 2021. In 2022, Mexico also updated its General Law on Climate Change to clarify implementation of the Mexican Emission Trading System. ¹⁶⁰ In a reverse move, in 2023 Slovenia abolished its carbon tax policy, first implemented in 1996. ¹⁶¹

FIGURE 9.

Countries with Climate Change Policies, by Type of Measure, 2022

Phase-Outs and Bans on Fossil Fuel Subsidies

In 2022, fossil fuel prices reached unprecedented highs and volatility following the Russian Federation's invasion of Ukraine, particularly as the Russian fossil gas supply to Europe was reduced sharply. ¹⁶² Various policy measures were implemented to shield consumers from surging prices and fuel poverty, maintaining the competitiveness of fossil fuels compared to low-emission alternatives. As a result, global subsidies for fossil fuel use surpassed USD 1 trillion, the highest annual value ever recorded. ¹⁶³

Many countries have Implemented temporary measures to shield end-consumers from rising fossil fuel prices, particularly in the transport and electricity sectors. ¹⁶⁴ Egypt, El Salvador, France, Peru and Thailand have put in place price caps or have fixed prices for fossil fuels for electricity and/or transport. ¹⁶⁵ Belgium, Guyana, South Africa and the United Kingdom have implemented exemptions on fossil fuel taxes and levies. ¹⁶⁶ Germany, India and the Republic of Korea have enacted compensation mechanisms for different consumer groups. ¹⁶⁷

All of these measures can be categorised as fossil fuel subsidies, effectively hampering the uptake of renewables by distorting end-user energy prices for fossil fuels. ¹⁶⁸ Policies supporting fossil fuels, including subsidies for exploration, production, and consumption, distort the market and are strong roadblocks to the deployment of renewables. ¹⁶⁹

Among efforts to slow fossil fuel growth, Colombia, an oil-producing country, announced in early 2023 that it would not approve new oil and gas exploration projects. ¹⁷⁰ In 2022, Indonesia signed a Just Transition Partnership with the Group of Twenty (G20) countries and the EU to phase out coal. ¹⁷¹ Brazil entered a Just Transition Partnership to phase out coal use in the Santa Catarina region. ¹⁷² India led the call to phase out fossil fuels at COP 27. ¹⁷³ Climate ministers in the Group of Seven (G7) countries agreed to speed the phase-out of unabated fossil fuel by 2050 at the latest. ¹⁷⁴ At the sub-national level, Quebec, Canada voted to ban new fossil fuel exploration and to shut down existing drill sites within three years. ¹⁷⁵ On the other hand, Norway approved new oil and gas projects worth USD 18.6 billion in 2023. ¹⁷⁶

Renewable Energy for Economic Development and Recovery

Amid the current global energy crisis, countries have developed recovery plans mentioning renewables (on both the supply and demand sides), usually targeting specific sectors such as industry and transport. In October 2022, the EU approved the National Recovery and Resilience Plans of the 26 Member States, which allocate a total of EUR 34 billion (USD 36.3 billion) in clean energy investment. ¹⁷⁷ Under the plans, Member States intend to invest in a range of renewable technologies, including solar (Austria, Bulgaria, the Czech Republic, Greece, Italy, Lithuania and Spain), offshore and onshore wind (Belgium, Finland, Greece, Italy and Poland), biomass (Austria, Croatia and Sweden), hydrogen (17 Member States) and energy infrastructure (Estonia, Latvia and Romania). ¹⁷⁸

In August 2022, the United States launched the Inflation Reduction Act with the objective of reducing inflation while also tackling climate change, allocating more than USD 370 billion to clean energy measures. ¹⁷⁹ At the sub-national level, Puerto Rico announced a USD 1 billion energy resilience relief package with dedicated funds for residential renewables. ¹⁸⁰ Greece's post-pandemic recovery plan allocates EUR 200 million (USD 213.5 million) for residential solar with storage. ¹⁸¹ However, NIMBY (“not-in-my-back-yard”) movements and opposition to renewable energy are still very present; in the United States, at least 121 local policies block or counteract the adoption of renewables in 31 states. ¹⁸²

Energy Efficiency

Energy efficiency policies are instrumental in driving the energy transition in all sectors (including buildings, heating and cooling)and complement renewable energy policies. Many existing recovery plans, such as in Canada, Europe, and the United States, include an energy efficiency component to tackle energy security. ¹⁸³ In an update to Japan's energy efficiency law for buildings, starting in 2025 energy efficiency standards will become compulsory for all new residential and non-residential buildings, in addition to the current coverage of non-residential buildings with a floor area of 300 square metres or more. ¹⁸⁴ Singapore has launched an Energy Efficiency Grant Program to help businesses invest in energy-efficient solutions to mitigate rising energy costs. ¹⁸⁵ In 2022, Cambodia announced a National Energy Efficiency Policy aimed at setting long-term energy transition objectives for the energy sector. ¹⁸⁶

TABLE 1.

Renewable Energy Indicators, 2022

1 Data are from BloombergNEF and include investment in new capacity of all biomass, geothermal and wind power projects of more than 1 MW; all hydropower projects of between 1 and 50 MW; all solar power projects, with those less than 1 MW estimated separately; all ocean power projects; and all biofuel projects with an annual production capacity of 1 million litres or more. Total investment values include estimates for undisclosed deals as well as company investment (venture capital, corporate and government research and development, private equity and public market new equity).

2 A country is counted a single time if it has at least one national or state/provincial target or policy.

3 Biofuel policies include policies listed in Reference Table R3a in the GSR 2023 Demand Module Data Pack, available at https://www.ren21.net/gsr2023-data-pack.

4 Data reflect all countries where the policies have been used at any time up through the year of focus at the national or state/provincial level. See Reference Table R5 in the GSR 2023 Supply Module Data Pack, available at https://www.ren21.net/gsr2023-data-pack/supply.

TABLE 2.

Renewable Energy Targets and Policies, 2022