Global investment in clean energy is expected to rise to a record $1.7 trillion in 2023. However, spending on fossil fuels is still set to exceed $1 trillion.
Solar is the “star performer” and is set to overtake investment in upstream oil by attracting $380 billion in 2023.
Investment in clean energy will need to eclipse fossil fuel spend by 9:1 by 2030 to stay on track for 1.5 degrees.
“Investment in clean energy technologies is significantly outpacing spending on fossil fuels as affordability and security concerns triggered by the global energy crisis strengthen the momentum behind more sustainable options,” according to International Energy Agency’s World Energy Investment Report-2023.
About $2.8 trillion is set to be invested globally in energy in 2023, of which more than $1.7 trillion is expected to go to clean technologies -- including renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements, and heat pumps, the report said.
Annual clean energy investment is expected to rise by 24 per cent between 2021 and 2023, driven by renewables and electric vehicles, compared with a 15 per cent rise in fossil fuel investment over the same period. But more than 90 per cent of this increase comes from advanced economies and China, presenting a serious risk of new dividing lines in global energy if clean energy transitions don’t pick up elsewhere.
“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 IEA Executive Director Fatih Birol.
“For every dollar invested in fossil fuels, about $1.7 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.”
Led by solar, low-emissions electricity technologies are expected to account for almost 90 per cent of investment in power generation. Consumers are also investing in more electrified end-uses. Global heat pump sales have seen double-digit annual growth since 2021. Electric vehicle sales are expected to leap by a third this year after already surging in 2022.
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. Enhanced policy support through major actions like the US Inflation Reduction Act and initiatives in Europe, Japan, China, and elsewhere have also played a role.