$1.4 trillion invested in clean power – matching fossil fuels for first time

Solar and wind power accounted for the biggest chunk of 2022 investments. PHOTO: REUTERS

NEW YORK – For the first time, the world invested as much money in replacing fossil fuels as it spent on producing oil, gas and coal, according to an analysis from BloombergNEF (BNEF).

Global investments in the clean energy transition hit US$1.1 trillion (S$1.4 trillion) in 2022, roughly equal to the amount invested in fossil fuel production, according to the research firm’s Energy Transition Investment Trends 2023 report. Never before has the amount spent on switching to renewable power, electric cars and new energy sources like hydrogen topped US$1 trillion.

While the amount represents a 31 per cent jump from 2021, it is still just a fraction of what is needed to slash greenhouse gas emissions and fight global warming. BNEF estimates annual investments in the transition must triple for the rest of this decade to give the world a shot at reaching net-zero emissions by 2050. 

Solar and wind power accounted for the biggest chunk of 2022 investments, reaching US$495 billion, a 17 per cent hike from the previous year. But electric vehicles were close behind with US$466 billion, and the amount invested in them worldwide is growing far faster, at 54 per cent.

Nearly half of all global energy transition investments – US$546 billion – were in China, while the United States came in second at US$141 billion. (Had BNEF counted the European Union as a single entity, it would have ranked second with US$180 billion.)

The US$1.1 trillion covers money invested in deploying clean energy technologies, according to BNEF. It does not include US$274 billion spent worldwide last year on expanding and strengthening power grids, US$79 billion invested in clean energy supply chains and manufacturing, or US$119 billion in equity financing raised by clean tech companies. Added together, the amount invested in the transition rises to about US$1.6 trillion.

That clean power investments essentially tied with those in fossil fuels is notable, considering investments in those older, polluting energy sources rose in 2022. Driven by high fuel prices, worldwide investment in the sector climbed a substantial US$214 billion, according to BNEF.  BLOOMBERG

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