Investment in clean energy technologies is significantly surging ahead of the spending on fossil fuels according to a new report by International Energy Agency (IEA).
IEA’s latest World Energy Investment report said this is being aided by affordability and security concerns triggered by the global energy crisis and the momentum behind more sustainable options.
The report said about $2.8tn is set to be invested globally in energy in 2023, of which more than $1.7tn is expected to go to clean technologies – including renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements and heat pumps. The remainder, slightly more than $1tn, is going to coal, gas and oil.
Annual clean energy investment is expected to rise by 24% between 2021 and 2023, driven by renewables and electric vehicles, compared with a 15% rise in fossil fuel investment over the same period. But more than 90% of this increase comes from advanced economies and China, presenting a serious risk of new dividing lines in global energy if clean energy transitions do not pick up elsewhere.
Led by solar, low-emissions electricity technologies are expected to account for almost 90% of investment in power generation. Clean energy investments have been boosted by a variety of factors in recent years, including periods of strong economic growth and volatile fossil fuel prices that raised concerns about energy security, especially following Russia’s invasion of Ukraine.
The biggest shortfalls in clean energy investment are in emerging and developing economies. There are some bright spots, such as dynamic investments in solar in India and in renewables in Brazil and parts of the Middle East. However, investment in many countries is being held back by factors including higher interest rates, unclear policy frameworks and market designs, weak grid infrastructure, financially strained utilities and a high cost of capital. M