Global Public Energy RD&D Expenditures: Looking at Country-Specific Data

By Kate Chi

The United States, France, Japan, and India: The Biggest Spenders*

Since economic development and natural resource endowments differ across countries, government expenditures in energy technological innovations should reflect country energy potential and align with sustainable development goals. In addition to global public energy RD&D spending patterns identified from the Climate Policy Lab’s updated database, country-level analysis yields further insights. In 2022, the United States, France, Japan, and India spent the most in U.S. dollars towards energy research, development and demonstration (RD&D), respectively: 9.6 billion, 4.9 billion, 3.4 billion and 3 billion dollars (Figure 1; Figure 2). France in particular nearly doubled its public energy RD&D expenditures from 2.6 billion in 2021 to 4.9 billion dollars in 2022 with the majority spent on hydrogen and fuel cell technologies and nuclear energy. Japan’s spending distribution and annual public energy RD&D budgets have been relatively consistent: on average 4 billion dollars in total budget each year. India’s expenditures incrementally increased in the past decades from 914.7 million in 2000 to 3 billion in 2022 as the economy continues to expand. Nuclear energy innovations are of priority in India and Japan: India used 94.8% of its total energy RD&D budget and Japan spent 1.1 billion dollars, 33.2% of its total budget, towards nuclear energy research, development, and demonstration in 2022. In addition, Japan and the United States respectively expended 28% and 26.4% of their total budgets towards improving energy efficiency. Energy storage technological advancement, however, received less financing across the four countries. France and India spent about 3% of their total budgets to invest in power and storage technologies. Fossil fuels RD&D received 409.4 million dollars of public expenditures in the United States, 169 million dollars in Japan, and 85.5 million in France in 2022. Meanwhile, governments of all these countries announced net-zero goals: Japan’s Prime Minister Kishida pledged to maximize renewable energy deployment, the Biden Administration took action to improve domestic clean energy supply chains, France unveiled emissions reduction strategies to mitigate climate risks, and Prime Minister Modi committed to net-zero by 2070 in India.

Although China is not listed as a top spender in the latest dataset because of missing data, trends from previous years showcase that China's total public energy RD&D expenditures had rapidly increased from 97.5 million in 2000 to 6.1 billion dollars in 2019 and may continue to rank highly among the biggest spenders worldwide. Renewable energy sources were the focus of government investment spending: 2.69 billion, accounting for 43.8% of China's public energy RD&D expenditures in 2019. Additionally, power and storage technologies received considerable financing of 725 million dollars in 2019 that encouraged innovations in energy system stability in China. 

Note: Figure 1 plots total public energy RD&D expenditures in million U.S. dollars in the United States, France, Japan, and India from 2000 to 2022. Figure 2 reports public spending in each energy category in 2022. Data is taken from Myslikova et al. (2023).

The United States and South Africa: Innovations Necessary to Shift Away from Fossil Fuels

In this post, the United States and South Africa are selected as country case studies for the unique insights that can be garnered from the data. Fossil fuels provide about 80% of total energy supply in both countries, yet the distribution of public energy RD&D expenditures is vastly different. In the United States, RD&D of cross-cutting technologies and energy efficiency have been the focal point of government energy innovations spendings, accounting for 30.9% and 26.4%, respectively, of total expenditures in 2022. Nuclear energy also received considerable government support and spendings more than tripled from 445.2 million in 2000 to 1.7 billion in 2022 (Figure 3). The U.S. government’s investment in energy efficiency increased from 878.6 million in 2000 to 2.5 billion dollars in 2022. Power and storage technologies in the United States have received only a small increase in financing for RD&D from year to year, reaching 490.8 million dollars in 2022.

 Additionally, a dramatic increase in total U.S. public energy RD&D expenditures was evident in 2009 during the fracking boom and the end of the global financial crisis. Record-high government spendings of 4.5 billion dollars were invested in fossil fuels RD&D (Figure 3). 1.2 billion dollars of expenditures were spent to innovate power and storage technologies, 2.8 billion towards energy efficiency, and 3 billion to renewable energy sources in 2009, while the total budget was 13.1 billion dollars. Since 2009, the distribution of public expenditures has been relatively consistent, and the total U.S. public energy RD&D budget increased from 6.3 billion in 2010 to 9.6 billion in 2022.

Although the United States announced a commitment to diminishing reliance on fossil fuels, the government still spent 691.2 million dollars in 2021 and 409.4 million dollars in 2021 on RD&D of fossil fuels (Figure 3). The Biden Administration’s 2035 target of a carbon pollution-free power sector requires rapid diversification in the energy mix since coal, natural gas, and oil currently contribute to about 80% of total energy supply in the United States (IEA 2023). Furthermore, to achieve the U.S. Nationally Determined Contribution (NDC) of reducing greenhouse gas emissions by at least 50% below 2005 levels in 2030, continuous investment to scale up renewables and to innovate energy efficiency and storage technologies is necessary in the United States.

Note: Figure 3 plots public energy RD&D expenditures in each category in million U.S. dollars in the United States from 2000 to 2022. Data is taken from Myslikova et al. (2023).

Conversely, public expenditures in South Africa from 2000 to 2022 indicate a specific priority to develop nuclear energy. The government has consistently allocated approximately 88.3% of total public energy RD&D expenditures each year towards nuclear energy in the past two decades and 85.9 million dollars in 2022 (Figure 4). Yet, energy supply in South Africa continues to rely on fossil fuels: Two nuclear reactors generate around 2.1% of total energy supply while coal accounts for 80% of the country’s supply (World Nuclear Association 2023; IEA 2023). Public expenditures on fossil fuels were larger between 2015 and 2019 with an average of 28.3 million dollars spent per year and have decreased in recent years. Although installed capacity of alternative fuels such as wind, solar, and biomass has increased incrementally, economic activities in South Africa remain dependent on carbon-intensive fuels and RD&D of renewable energy sources receive little investment. Similarly, energy efficiency, hydrogen and fuel cells, power and storage technologies, and other cross-cutting technologies also do not receive much support to invest in energy innovations.

Furthermore, South Africa has experienced an energy crisis in the past decade due to mismanagement of state-owned utility Eskom and aging coal-fired power infrastructure. Load shedding, that is, scheduled power cuts to avoid overloading the electrical grid, is generally a last-resort measure to prevent irreversible damage of essential equipment in the generation, transmission and distribution network. Yet it has now become a common practice in South Africa. In 2022, South Africa endured the worst energy crisis on record with 205 days of rolling blackouts and a recurring shortage of electricity supply that crippled the economy (Africa Energy Chamber 2023). Thus, the allocation of RD&D expenditures urgently calls for reassessment and energy storage technologies must be advanced. Although nuclear energy is renewable and far less polluting than coal-fired power production, South Africa is endowed with competitive solar and wind energy potential, and therefore appropriate government investment in renewable sources may help scale up clean energy production and alleviate the ongoing energy crisis as the economy continues to develop. For South Africa to supply and expand consistent electricity services and realize its net-zero goal by 2050 requires strategic allocation of spendings that invest in renewables, storage technologies, and energy efficiency.

Note: Figure 4 plots public energy expenditures in each category in million U.S. dollars in South Africa from 2000 to 2022. Data is taken from Myslikova et al. (2023).

To conclude, prior to budget allocation, governments should assemble expert teams to consider energy demand, map out a national trajectory to reduce emissions, and optimize the distribution of public energy RD&D expenditures. Guidelines must be established to set quantifiable goals for innovation progress to ensure reasonable productivity of government-financed energy projects. Auditing is also essential that considers the environmental and economic impact of energy technological innovations. As energy consumption continues to grow internationally, public expenditures play a critical role to chart a course between economic growth and sustainability and to affirm the Paris Agreement.

Kate Chi is a Junior Research Fellow at the Climate Policy Lab at The Fletcher School.

*Country data is not complete every year in the database. Of a particular note, Chinese RD&D public spending is incomplete starting from 2020. China drops behind some countries that have reported complete information but may have actually invested less than China.

References

Africa Energy Chamber. (2023). Understanding South Africa’s Energy Crisis. Retrieved from https://energychamber.org/understanding-south-africas-energy-crisis/

International Energy Agency (2023). World Energy Statistics. Data downloaded from https://www.iea.org/data-and-statistics/data-product/world-energy-statistics-and-balances

Myslikova, Z., Gallagher, K. S., Zhang, F., Narassimhan, E., Oh S., & Chi, K. (2023). “Global Public Energy RD&D Expenditures Database.” Climate Policy Lab, The Fletcher School, Tufts University. Accessed January 2, 2024.

World Nuclear Association (2023). Nuclear Power in South Africa. Retrieved from https://world-nuclear.org/information-library/country-profiles/countries-o-s/south-africa.aspx