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More than $1.7 trillion will be invested in clean energy, including renewables, electric vehicles and nuclear in 2023, while just over $1 trillion will be spent on oil, gas and coal, according to projections by the International Energy Agency.
Solar is the ‘star performer’, with more than $1 billion a day expected to be invested in solar in 2023, and $380 billion for the year, “putting that spending above oil. upstream for the first time,” the IEA said. in a report released Thursday.
The intergovernmental organization said the increasing speed of the clean energy transition risks creating a global decarbonization gap, noting that more than 90% of the increase in clean energy investment came from advanced economies and China.
Just five years ago, the spending ratio between fossil fuels and clean energy was one to one, IEA Executive Director Fatih Birol said in a press release on Thursday. “Clean energy is moving fast – faster than many people realize. This is clear in investment trends, where clean technologies are moving away from fossil fuels,” he said.
Despite the increase in clean energy spending, there has also been a global resurgence in oil and gas production spending due to profits generated by recent high prices. IEA upstream oil and gas project spending will rise 7% this year, marking a return to 2019 levels and bringing fossil fuel investment to more than double the level it is expected to be. 2030 to achieve global net zero carbon emissions by 2050, according to IEA.
“Global demand for coal reached a record high in 2022, and coal investment this year is on track to reach almost six times the levels projected in 2030 under the net zero scenario,” the IEA said in a statement. his statement.
As investments in renewables now outpace fossil fuels, barriers to increased deployment include rising costs for associated components such as critical minerals and semiconductors during the COVID-19 pandemic, costs still high wind turbines, an aging power grid and a slow permitting process.
“Weak grid infrastructure is a limiting factor for renewable energy investment in many developing economies, and here too current investment flows are highly concentrated,” the IEA report says. “Advanced economies and China account for 80% of global spending and nearly all of the growth in recent years.”
China tops the list of global clean energy investors of 2019 so far, the IEA said, followed by the European Union in second place and then the United States.
However, the financial support the US renewable energy industry is receiving from the Cut Inflation Act is encouraging the sector to grow, according to the report.
Globally, economic factors are hampering clean energy investments in emerging and developing economies, according to the report. These investments are being “held back” by rising interest rates, “unclear policy frameworks and market designs”, financially distressed utilities and a high cost of capital.
“Much more needs to be done by the international community, particularly to boost investment in low-income economies, where the private sector has been reluctant to venture,” the IEA said in its statement.
