Global energy investment is set to increase by 8% to $2.4 trillion in 2022, mainly due to the rise in clean energy, according to the International Energy Agency's latest report on Wednesday.
Clean energy investment is expected to exceed $1.4 trillion in 2022.
Although encouraging, this investment growth level is still far from enough to tackle the multiple dimensions of today's energy crisis, the IEA warned.
A massive surge in investment to accelerate clean energy transitions is necessary, 'to ease the pressure on consumers from high fossil fuel prices, make our energy systems more secure and get the world on track to reach our climate goals,' IEA Executive Director Fatih Birol said.
What holds investors back from accelerating their spending is that 'almost half of the overall increase in spending is a reflection of higher costs, from labor and services to materials such as cement, steel and critical minerals,' the agency said.
Almost half of the additional $200 billion in capital investment in 2022 is likely to be eaten up by higher costs.
Public funds to support sustainable recovery are scarce, policy frameworks are often weak, economic clouds are gathering, and borrowing costs are rising, all of which undercuts the economic attractiveness of capital-intensive clean technologies, the report said.
Meanwhile, global oil and gas sector income is set to jump to $4 trillion in 2022.
Major oil and gas companies need to do more to diversify their spending, the IEA said as clean energy investment accounts for only around 5% of oil and gas company capital expenditure worldwide, up from 1% in 2019.
According to the IEA, clean energy investments grew by 2% a year between 2015 and 2020, and since 2020, the pace of growth has accelerated significantly to 12%.
All is not lost in the fight for a cleaner and more secure energy future as spending on solar PV, batteries and electric vehicles is now growing at rates consistent with reaching global net zero emissions by 2050.
By Zeynep Beyza Kilic