On the back of high fossil fuel prices, enhanced policy support, and alignment towards climate change, the investments in green energy are now 70 per cent higher than in fossil fuels, a new report by the Paris-based International Energy Agency (IEA) suggested on Thursday.
In its “World Energy Investment 2023” report, the agency said, “For every $1 spent on fossil fuels, $1.7 is now spent on clean energy. Five years ago this ratio was 1:1.”
It said that in 2023, $2.8 trillion is expected to be invested in the energy sector. Out of this, over $1.7 trillion will be invested towards clean energy, including renewable power, nuclear, grids, storage, low-emission fuels, efficiency improvement, and electrification. The remaining $1 trillion will go into fossil fuels, with 15 per cent towards coal alone.
The report added that the though declining investment in coal supply is above the pre-pandemic level and is expected to increase by 10 per cent in 2023.
“Investment in new coal-fired power plants remains on a declining trend, but a warning sign came in 2022 with 40 GW of new coal plants being approved – the highest figure since 2016. Almost all of these were in China, reflecting the high political priority attached to energy security after severe electricity market strains in 2021 and 2022, even as China deploys a range of low-emission technologies at scale,” the report said.
The IEA said that the war in Ukraine has accelerated momentum behind the deployment of clean energy technologies. It is led by renewable power and electric vehicles (EVs). In power, solar energy has the highest investment.
“Solar is the star performer and more than $1 billion per day is expected to go into solar investments in 2023 ($380 billion for the year as a whole), edging this spending above that in upstream oil for the first time,” it said.
Moreover, the investments in EVs have more than doubled since 2021.
“Consumers are investing in more electrified end uses. Demand for electric cars is booming, with sales expected to leap by more than one-third this year after a record-breaking 2022. As a result, investment in EVs has more than doubled since 2021, reaching $130 billion in 2023,” it added.
It also highlighted that if the investment in green energy continues at the rate seen since 2021, aggregate spending in 2030 on low-emission power, grids, storage, and end-use electrification would exceed the levels required to meet the world’s announced climate pledges.
“For some technologies, notably solar, it would match the investment required to get on track for a 1.5-degree Celsius stabilisation in global average temperatures,” the report said.
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