Solar power investments are set to overtake those for oil production for the first time this year, as global clean energy investment is on course to rise to $1.7 trillion, according to the International Energy Agency's (IEA) new report Thursday.
Investments in renewable energy, electric vehicles, nuclear power, grids, storage, low-emission fuels, efficiency upgrades, and heat pumps are expected to total more than $1.7 trillion of the about $2.8 trillion expected to be invested globally in energy this year, compared to over $1 trillion for fossil fuels.
Clean energy investment is extending its lead over fossil fuels as affordability and security concerns triggered by the global energy crisis strengthen the momentum behind more sustainable options, the IEA said in its World Energy Investment report.
Annual investment in clean energy is expected to rise by 24% between 2021 and 2023, compared with a 15% rise in fossil fuel investment over the same period.
However, the IEA cautions that more than 90% of this growth will come 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.
The agency found that the biggest shortfalls in clean energy investment are in emerging and developing economies.
'Much more needs to be done by the international community, especially to drive investment in lower-income economies, where the private sector has been reluctant to venture,' the report said.
According to IEA Executive Director Fatih Birol, 'clean energy is moving fast, faster than many people realize. This is clear in the investment trends, where clean technologies are pulling away from fossil fuels.'
'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,' Birol said.
Investment in renewables is forecast to reach $650 billion this year, a 10% increase from last year's volume.
Solar power is expected to take $380 billion of this amount, becoming the star performer as more than $1 billion per day is expected to go into solar investments this year.
- Upstream oil and gas spending to rise by 7%
As investment in clean energy technologies grows, spending on upstream oil and gas is expected to rise by 7% in 2023, taking it back to 2019 levels.
Growing fossil fuel investments follow the record earnings of the global oil and gas industry last year, hitting about $4 trillion.
Russia's war in Ukraine drove natural gas prices to record levels and oil prices back to levels not seen since the mid-2010s.
Based on the analysis of the announced spending plans of all the large and medium-sized oil, gas and coal companies, the IEA expects investment in new fossil fuel supply to rise by 6% this year to $950 billion.
The largest share of this total is going to upstream oil and gas, where investment is expected to rise by 7% in 2023 to more than $500 billion, bringing this indicator in aggregate back to the levels of 2019.
By Nuran Erkul in London