Green power tops fossil spend
Clean energy investment has surpassed fossil fuels.
The momentum behind clean energy technologies continues to gain strength as investment in these sustainable options outpaces spending on fossil fuels, according to a report by the International Energy Agency (IEA).
The report states that in 2023, around US$2.8 trillion will be invested in global energy, with over US$1.7 trillion allocated to clean technologies such as renewables, electric vehicles, nuclear power, storage, and efficiency improvements. The remaining funds, just over US$1 trillion, will go towards coal, gas, and oil.
Annual investment in clean energy is projected to increase by 24 per cent between 2021 and 2023, fueled by the growth of renewables and electric vehicles. In comparison, fossil fuel investment rose by 15 per cent during the same period.
However, the report also says that more than 90 per cent of the increase in clean energy investment originates from advanced economies and China, posing a risk of further global energy divisions if other regions fail to accelerate their clean energy transitions.
“Clean energy is moving fast - faster than many people realise. This is clear in the investment trends, where clean technologies are pulling away from fossil fuels,” said Fatih Birol, Executive Director of the IEA.
“For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy. Five years ago, this ratio was one-to-one. One shining example is investment in solar, which is set to overtake the amount of investment going into oil production for the first time.”
Solar power, in particular, is leading the charge, with annual spending expected to reach approximately US$380 billion in 2023.
This development positions solar as a powerful tool for rapid decarbonisation across the entire economy, as stated by Dave Jones, head of data insights at renewable energy think tank Ember.
Interestingly, some of the world's sunniest regions have yet to see substantial solar investment, highlighting untapped potential.
While investment in fossil fuels is expected to rebound, reaching levels more than double what is required in the IEA's Net Zero Emissions by 2050 Scenario, the report underscores the urgency to reduce dependence on these carbon-intensive sources.
The coal sector, in particular, experienced record-high demand in 2022, and investment in coal is predicted to surpass levels projected for 2030 in the Net Zero Scenario by nearly six times.
The report reveals that the oil and gas industry allocated less than 5 per cent of its capital spending to low-emissions alternatives such as clean electricity and carbon capture technologies in 2022.
This underscores the need for greater investment in cleaner alternatives within the sector.
Additionally, emerging and developing economies face significant gaps in clean energy investment due to factors such as high interest rates, unclear policies, weak grid infrastructure, and limited access to capital.
International efforts are crucial to drive investment in these regions and bridge the gap between the clean energy haves and have-nots.