Heightened fossil fuel prices are a key reason for this increase as policy interventions aim to shield consumers from ballooning prices. In 2021, Russia was the largest single provider of fossil fuel subsidy payments, followed by Iran and China. In contrast, Europe and the US spent a combined USD 79 billion on renewable energy subsidies in 2021.
Incentives are set to grow through the increasing budgets of programs such as the Inflation Reduction Act in the US and the Net Zero Industry Act in Europe. While fossil fuel subsidies mostly come in the form of direct price support or lower tax rates (i.e. OpEx that incentivizes consumption of fossil fuels), renewable energy subsidies are typically CapEx, focusing on incentivizing capacity buildout. They come in the form of things like investment and production incentives, tax incentives and breaks, guarantees, favorable loans and purchase agreements.
Other facts about the energy transition
Do you want to know more about the opportunities in the energy transition?
Important information
The contents of this document have not been reviewed by the Securities and Futures Commission ("SFC") in Hong Kong. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. This document has been distributed by Robeco Hong Kong Limited (‘Robeco’). Robeco is regulated by the SFC in Hong Kong. This document has been prepared on a confidential basis solely for the recipient and is for information purposes only. Any reproduction or distribution of this documentation, in whole or in part, or the disclosure of its contents, without the prior written consent of Robeco, is prohibited. By accepting this documentation, the recipient agrees to the foregoing This document is intended to provide the reader with information on Robeco’s specific capabilities, but does not constitute a recommendation to buy or sell certain securities or investment products. Investment decisions should only be based on the relevant prospectus and on thorough financial, fiscal and legal advice. Please refer to the relevant offering documents for details including the risk factors before making any investment decisions. The contents of this document are based upon sources of information believed to be reliable. This document is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Investment Involves risks. Historical returns are provided for illustrative purposes only and do not necessarily reflect Robeco’s expectations for the future. The value of your investments may fluctuate. Past performance is no indication of current or future performance.