Global investment in the clean energy market is set to rise $1.7 trillion this year with solar energy predicted to override oil production for the first time ever.
About $2.8 trillion is posed for global investment in energy in 2023 overall. $1.7 trillion is expected to go to green technologies such as electric vehicles, nuclear power, and storage while the remaining $1 trillion is set to be allocated to fossil fuels including coal, gas, and oil!
According to the latest IEA World Energy Investment Report, increasing preference towards sustainable energy options is strengthened by affordability and security concerns. These concerns follow Russia’s invasion of Ukraine and are triggered by the global energy crisis. Enhanced policy support through major actions like the US Inflation Reduction Act have played a part, driving momentum within this area.
“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.” said IEA Executive Director Fatih Birol.
It is anticipated that annual clean energy investment will rise 24% by end of 2023, driven by renewables, compared to a 15% rise in fossil fuel investment over the same period. Over 90% of this increase comes from advanced economies, presenting a serious risk of new dividing lines in global energy if clean energy transitions do not pick up elsewhere.
The biggest shortfalls in clean energy investment are found in developing economies. There are some positive developments, such as dynamic investments in solar in India, however, financing in many countries is being held back by factors including higher interest rates, unclear policy frameworks and weak grid infrastructure.
The IEA and IFC call for more to be done by the international community, especially to drive investment in lower-income economies, where the private sector has been reluctant to venture.
To help address this, the IEA and the IFC will release a new special report on the 22nd June, titled - Scaling Up Private Finance for Clean Energy in Emerging and Developing Economies.
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