Tracking policy responses to the crisis

This section focuses on energy efficiency policy announcements made in response to the Covid-19 crisis to the end of October 2020, including changes to regulation and government funding announcements. In addition, it discusses some policies that are not targeted at efficiency but may have an impact on it, such as energy bill relief for households and businesses.

The IEA Sustainable Recovery Plan shows how the world can maintain and create jobs, boost economic growth and improve energy sustainability and resilience in the energy sector in the wake of the Covid-19 crisis.

Energy efficiency action (including investments in transport and urban infrastructure)1 comprises the largest component of the plan, more than half of the proposed USD 1 trillion in public and private investment in each of the next three years. Investing in efficiency is central to the plan because many energy-efficient products and services are cost-effective and existing programmes can be ramped up in the near term. In addition, energy efficiency projects are labour-intensive, meaning for every dollar spent, a large amount goes into labour, helping to maintain existing jobs and create new jobs quickly. In some sectors, where skills barriers are minimal, energy efficiency investments can also provide employment for displaced workers.

Proposed allocation of average annual spending under the Sustainable Recovery Plan by category


Proposed allocation of average annual spending under the Sustainable Recovery Plan by measure


Most of the investment in energy efficiency results in energy savings and therefore monetary savings. Crucially, this means the cost per tonne of greenhouse gas emissions abated is often negative, as shown below under the modelled abatement of the measures in the Sustainable Recovery Plan.

Cost of abatement and emissions avoided as a result of selected Sustainable Recovery Plan measures, by category


While many governments’ economic relief and stimulus announcements are still being formulated, around USD 114 billion of public spending in the energy sector announced to the end of October 2020 is being allocated to measures considered as “clean energy stimulus”.2

In addition to the spending announcements analysed here, governments are also proposing support for the energy sector via regulatory changes, tax breaks or pauses on levies and royalties, and purchase of debt or equity.

Around 58% of public clean energy stimulus spending announced to the end of October 2020, totalling USD 66 billion, has been allocated to energy efficiency-related measures. The announced efficiency-related stimulus has the potential to create 5 million energy efficiency job-years,3 when factoring in leveraged private investment (see also Energy efficiency jobs and the recovery).

Announced public clean energy stimulus spending by category*


Billion USD

Share of clean energy stimulus spending

Efficiency-related (Total)



Efficiency-related (Transport)



Efficiency-related (Other)















* One full-time job for one year. Notes: This table provides a breakdown of the funding committed to clean energy stimulus spending. It excludes clean energy-related portions of the European Union’s EUR 750 billion Next Generation EU Funds, as details on the spending allocations were still being finalised at the time of writing. Stimulus spending for G20 countries partly based on data from Energy Policy Tracker. Committed investment in hydrogen is included under “innovation”.

Announced public efficiency-related stimulus funding by measure to end of October 2020


Building retrofits and electric vehicles dominate efficiency-related stimulus spending

Of the USD 66 billion in public stimulus spending on efficiency-related measures announced to the end of October, USD 26 billion are dedicated to building retrofits. However, limited spending has been announced on high efficiency or near zero energy new buildings.

Around USD 13.5 billion has been announced to help accelerate the shift to electric vehicles, with a further USD 7 billion allocated to electric vehicle charging networks in funds allocated to urban infrastructure. In contrast, less than USD 1.5 billion has been announced for new efficient internal combustion engine vehicles.

In contrast to buildings, no spending has been announced to stimulate the purchase of energy-efficient appliances that exceed minimum energy performance standards. Economic stimulus announcements comprise just USD 3.0 billion for industrial energy efficiency globally, and less than USD 1.3 billion for new efficient vehicles, despite the significant opportunities that exist for efficiency gains in these sectors.

Of the USD 12.5 billion of efficiency spending announced for urban infrastructure, a large proportion has been allocated for new cycling infrastructure, as governments seek to bolster the use of active transport to replace public transport use in the wake of the pandemic. For example, the United Kingdom has committed to invest around USD 2.5 billion in active transport with new and improved cycling infrastructure, the Canada Healthy Communities Initiative commits USD 22.7 million to a range of initiatives including those that support walking and cycling, and in the Greater Paris Region, France has committed over USD 330 million to create up to 680 kilometres of cycleways.

European governments have announced the vast majority of stimulus spending on efficiency, other regions lagging

European governments have been the most active in announcing support for efficiency-related measures. Around USD 57 billion of spending proposals (or 86% of global stimulus announcements for efficiency) has been announced by European governments to the end of October, with the remaining 14% split between Asia Pacific and North America. Of European announcements, the largest are from France, Germany and Italy.

In contrast, only very small amounts of energy efficiency spending have been announced in Latin America and no major announcements recorded in Africa.

Announced public energy efficiency stimulus funding by region to end of October 2020


In addition to announcements made at the country level, the European Union has announced a EUR 750 billion (USD 840 billion) stimulus package, of which roughly one-third has been allocated to climate action. If spending follows similar patterns to past EU spending, around EUR 190 billion (USD 209 billion) of this package could flow to energy efficiency, which would increase public stimulus spending on efficiency by a factor of four.

Spending announcements for efficiency are not yet at the level outlined in the IEA Sustainable Recovery Plan

Public stimulus support for efficiency announced to the end of October, and the estimated private funds that could be leveraged, are below the levels of potential investment opportunities identified in the IEA recovery pathway.4 In certain areas, such as appliances and new efficient cars, there have been few stimulus announcements, compared with the opportunity identified in the IEA Sustainable Recovery Plan.

Estimated public and private investments from stimulus announcements to date for clean energy by efficiency measure compared with the IEA Sustainable Recovery Scenario to end of October 2020


Estimated public and private investments from stimulus announcements for clean energy by category compared with the IEA Sustainable Recovery Plan to end of October 2020


On 21 July 2020, EU leaders agreed to spend EUR 750 billion (USD 840 billion) on the economic recovery over the next three years while ensuring that their economies undertake the green and digital transitions. Around 37% of this EU funding is earmarked for climate action to support the European Green Deal and contribute to achieving the European Union’s new 2030 climate targets, which will be updated by the end of the year. Based on current proposals by the European Commission and past funding patterns, around EUR 190 billion (USD 209 billion) of the recovery plan could be allocated to energy efficiency-related measures.5 A large part of it will focus on buildings, supporting the Renovation Wave for Europe published on 14 October 2020, and the investment opportunity and job creation potential it offers, by at least doubling the renovation rate and retrofitting 35 million building units by 2030. Overall, the efficiency investments would significantly exceed the stimulus pathway outlined for Europe in the IEA Sustainable Recovery Plan, especially when taking into account additional clean energy stimulus investments by EU member states.

As governments respond to the economic crisis, policy action to stimulate energy efficiency sector growth and jobs could help to accelerate energy efficiency progress beyond pre-pandemic levels.

In response to the anomalous energy consumption and emissions data that 2020 is likely to produce, however, some governments have reduced ambitions for energy intensity improvement targets for periods that include 2020. Several governments have also delayed the introduction of new minimum energy performance standards or star ratings for appliances, vehicle fuel-efficiency standards and building energy performance codes.

Delaying policy, and deferring or weakening planned changes to energy efficiency regulations, could slow energy efficiency progress. At the same time, economic stimulus packages that do not build energy efficiency into spending and programmes risk locking in higher energy use and bills in buildings, appliances and vehicles for decades to come.

Utility-funded energy efficiency programmes are evolving to address the Covid-19 crisis

Utility-funded programmes are now a widespread tool for improving energy efficiency globally. In Canada and the United States, combined spending on utility‑funded energy efficiency and demand response programmes totalled almost USD 9 billion in 2017. As of 2020, there are 49 utility-funded energy efficiency programmes in 24 countries (Croatia launched new energy efficiency obligations in 2019 and Cyprus in 2020).6

The Covid-19 crisis has slowed the implementation of energy efficiency measures under utility-funded programmes and forced adjustments to programmes to help utilities and other programme participants adapt to the health crisis.

In Australia, the New South Wales Energy Savings Scheme administrator has provided case by case concessions and flexibility to both obligated parties and participating energy efficiency service providers due to Covid-19 impacts. These include extensions to reporting dates, and dates to meet obligations or pay penalties, as well as extensions to audit due dates. The Victorian Energy Upgrades Program has also made adjustments due to Covid‑19 lockdowns, restricting eligible upgrades to critical repair activities, such as to space and water heating systems.

In Europe, Italy’s white certificate scheme has also made allowances due to the crisis, with a proposed extension to deadlines for the 2019 compliance year. France’s white certificate scheme has made similar concessions, including a six-month extension to the time limit on creating certificates for completed activities, a 12-month extension on certificate multipliers for heating and insulation upgrades, and the introduction of new multipliers to help non-residential buildings upgrade away from fossil fuel heating.

In the United States, policy makers are also adapting to the impact of the crisis. The Michigan Public Service Commission has recommended rolling the 2020 and 2021 energy utility-funded programme targets into one, to maintain the programme’s energy efficiency targets while providing some flexibility due to the disruption in 2020. In Colorado, Xcel Energy’s utility energy efficiency and demand management programmes are set to go ahead in 2021 and 2022 with investment and energy savings targets higher than those in 2019 and 2020.

Further details on the challenges and solutions for utility-funded energy efficiency programmes during the Covid-19 pandemic and recovery can be found in the IEA article published in August 2020.

Energy bill relief is often being delivered alongside efficiency stimulus

Several governments have introduced measures to defer energy bills or provide other support for vulnerable households as the pandemic pushes down their incomes and increases their risk of energy poverty. To the end of October 2020, governments had announced around USD 13.7 billion in support for consumers to manage higher energy bills. In Indonesia, for example, 24 million low-income households have been offered free electricity for six months, while 7 million additional households have benefitted from electricity bill discounts.

Alongside bill relief packages, some countries are also announcing energy efficiency spending. Stimulus spending on building renovation programmes has been announced in Canada (USD 220 million), France (USD 7.7 billion) and Germany (USD 2.2 billion). Over time, these investments in energy efficiency will provide ongoing bill relief while creating jobs and delivering economic, health and environmental benefits. 

In response to a global slowdown in energy efficiency improvement, the IEA executive director convened an independent high-level commission in June 2018 to examine how progress on energy efficiency could be accelerated through new and stronger policy action. The 23-member Global Commission for Urgent Action on Energy Efficiency was composed of current and former national leaders, ministers, chief executives and global thought leaders. Members of the commission worked together to produce a set of 10 recommendations – finalised during the Covid-19 crisis – to encourage governments to implement more ambitious energy efficiency actions. Several of the recommendations were intended to encourage governments to deploy energy efficiency measures for their short-term economic stimulus benefits and their contribution to achieving long-term clean energy transitions.

Several governments are taking action to make policy consistent with the recommendations. Germany’s stimulus policy package shows a strong focus on building renovation, expanding a pre-existing mechanism – the CO2 Building Renovation Programme – by an additional EUR 1 billion. This step will help to unlock the job creation potential of buildings sector energy efficiency (Recommendation 2), a sector that tends to be particularly labour-intensive. Similarly, Italy has supercharged the Eco Bonus programme to provide 110% tax incentives from 1 July 2020 to 31 December 2021 for energy efficiency building renovations, installation of rooftop solar PV, and electric vehicle charging stations.

Spain’s Law on Climate Change and Energy Transition, approved in May 2020, sets out a long-term vision and policy framework to achieve carbon neutrality by 2050. The law puts energy efficiency at the heart of Spain’s cross-governmental climate action, committing to improve efficiency and reduce primary energy consumption by at least 35% by 2030 (Recommendations 1 and 10). It focuses strongly on building renovation, adding to Spain’s existing long-term strategy for energy rehabilitation in the buildings sector (Recommendation 2). Under the law, the national government will closely collaborate with municipalities to expand more efficient and clean modes of transport in key urban areas, including by establishing low-emission zones no later than 2023 and investing in alternative mobility infrastructure (Recommendation 7).

Canada’s recent announcement that will step up its Community Efficiency Financing Initiative creates more opportunities for municipalities and sub-national partners to take stronger efficiency action (Recommendation 7). The new USD 300 million fund supports municipalities’ financing programmes for home energy performance upgrades, which have proven to be effective in overcoming barriers such as access to capital or uncertainty about the cost and quality of retrofits, while creating local jobs and reducing emissions.

China’s new policy for supporting private energy conservation, announced in July 2020, sharply focuses on scaling up private sector efficiency investment through a range of financial instruments (Recommendations 3 and 4). Preferential tax incentives create opportunities for more efficient use of energy and water resources among businesses, while the policy strongly encourages financial institutions to incorporate efficiency criteria in their finance services. Sub-national governments play a key role in implementing and monitoring these measures (Recommendation 7). 

While energy policy makers have turned their attention to the Covid-19 crisis, they have also continued to implement policies and regulation planned before the crisis, which could magnify the impact of new announcements. Policy changes that have proceeded as planned in 2020 include:

  • The Australian Energy Market Commission released its final determination on a new rule for wholesale demand response mechanism. Under the rule, large industrial and commercial consumers will be able to sell demand response in the wholesale electricity market either directly or through aggregators (demand response service providers) for the first time, starting in late 2021.
  • Brazil launched a new Procel Lab Programme to help startups develop new energy-efficient solutions. The Brazilian Electricity Regulator also announced a new website to publish data from Brazil’s Energy Efficiency Obligation Programme.
  • China is implementing its Green and High-Efficiency Cooling Action Plan, released in 2019. This includes improved minimum energy performance standards for residential air conditioners, which came into force on 1 July 2020.
  • Denmark launched a new programme, Skrotningsordningen, to subsidise the replacement of oil burners with heat pumps in buildings located away from the district heating or gas grid.
  • Germany introduced tax deductions for building renovations (Steuerliche Förderung der energetischen Gebäudesanierung), which allow homeowners to deduct from income taxes 20% of the cost of renovations, up to EUR 40 000.
  • The Netherlands introduced a suite of policies including a revolving fund for heat projects (Warmtefonds), Regional Industrial Cluster Programmes targeting the industrial sector, and a new digital platform providing a full-service solution to residents and building owners in the consultation, implementation and financing stages of building renovations.
  • New Zealand’s State Sector Decarbonisation Programme was announced, which includes NZD 200 million in capital funding to help reduce the public sector’s energy-related carbon emissions. This funding will support decarbonisation projects including low-emissions heating and cooling, energy-efficient lighting, and low-emissions vehicles. Approximately NZD 80 million in funding has already been allocated for a range of projects, including replacing coal boilers in schools, universities and hospitals with low-emissions alternatives.
  • Spain began developing an action plan to implement its National Strategy Against Energy Poverty 2019-24, which will provide support to the 3.5 million to 8.1 million citizens living in energy poverty, including energy efficiency measures focusing on buildings and appliances.
  • Turkey published new definitions and energy use limits for near-zero energy buildings and began implementing the 2019 Presidential Decree on Energy Savings in Public Buildings, which requires public buildings over 10 000 m2 or consuming over 250 tonnes of oil equivalent per year to save 15% of final energy consumption between 2020 and 2023.
  • In Viet Nam, a range of new minimum energy performance standards and labels for appliances came into force, including for rice cookers, washing machines, televisions, and refrigerators. 
  1. For the purposes of this analysis, “energy efficiency” includes investments in electric vehicles, urban infrastructure and rail, all of which tend to be more energy efficient when they replace incumbent technologies. It excludes clean cooking and end-use renewables. 

  2. “Clean energy stimulus” refers to stimulus investments including renewable energy generation, biofuels, battery storage and clean hydrogen, electricity networks, electric vehicles and charging infrastructure, rail, public transport, cycling and walking, material efficiency, and buildings, appliance and industrial energy efficiency. This analysis focused largely on G20 countries, with selected data included for other OECD nations and other countries where data was available.

  3. One full-time job for one year.

  4. The recently announced EU stimulus package is omitted from this analysis because at the time of writing, details on spending are yet to be finalised. However, the IEA expects the plan to result in significant spending on the energy sector and energy efficiency.

  5. EU member states will submit recovery and resilience plans by April 2021, which will outline a more precise allocation of funds.

  6. Note by Turkey: The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the “Cyprus issue”.

    Note by all the European Union Member States of the OECD and the European Union: The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.