The hydrogen sector received least boost at $1.1 billion but the sector grew the fastest, tripling investment every year
For the very first time in history, investment in low-carbon energy technologies worldwide was equal to money spent on fossil fuels, according to BloombergNEF, a global strategic research service provider.
The amount of investment in cleaner energy technology in 2022 was $1.1 trillion, a study by the organisation noted. This came despite an uptick in spending on fossil fuels as many regions focused their attention on energy security, it added.
Investment towards energy transition grew by $261 billion from the previous year — a 31 per cent increase from 2021. But the investment in fossil fuels was also simultaneously up $214 billion over 2021 levels.
“The growth in fossil fuel investments in 2022 occurred against the backdrop of high commodity prices, with many oil and gas majors earning record profits. Increased climate awareness has, however, made these companies more focused on share buybacks and diversifying to lower-carbon assets,” the researchers explained.
The historic shift in investment trends cannot be reversed, as low-carbon industries are on the upward trend, despite clean energy supply not yet being a match for fossil fuels, the authors added.
The trillion-dollar investment in energy transition included renewables (solar, wind, nuclear), storage, charging infrastructure, hydrogen production, and carbon capture, utilisation, and storage. It also included tech such as small-scale solar, heat pumps, and zero-emission vehicles.
The researchers broke down the investment into various categories: Renewable energy remained the largest sector at $495 billion (up 17 per cent year-on-year) and electrified transport was growing much faster and hit $466 billion (up 54 per cent).
While supply chain disruption and inflation may have posed initial hurdles in 2020 and 2021, these factors did not come in the way of countries investing heavily in clean energy, the authors noted.
Other than nuclear power, which did not see much growth in the last year, all the other sectors surpassed record levels of investment. Electrified heat received $64 billion, energy storage investment reached $15.7 billion and carbon capture and storage hit $6.4 billion, the findings in the report showed.
The hydrogen sector received the least boost at $1.1 billion but the sector grew the fastest, tripling investment every year.
Investment in clean-technology factories grew fourfold from 2018 and reached $78.7 billion in 2022.
“Battery-related factory spending is growing at pace and now attracts more investment than other clean-tech sectors at $45.4 billion in 2022. Facilities to produce lithium-ion battery components accounted for about 58 per cent of facilities opened in 2022,” the researchers wrote.
Solar continues to attract significant manufacturing investment at $23.9 billion in 2022, while the wind is showing robust growth with investment up by a third year-on-year, they added.
China is still the leading manufacturer of low-carbon technologies because it attracted over half of the trillion-dollar investment at $546 billion, the data showed. This was followed by the European Union at $180 billion and the United States at $141 billion.
According to the net-zero scenario envisaged, energy transition and grid investment need an average annual $4.55 trillion investment between 2023 and 2030. In the 2030s, the annual investment goes up to $6.88 trillion. By the 2040s, annual investment on average reaches a total of $7.87 trillion, almost six times the 2022 levels.
Electrified transport forms the majority of the investment required, followed by grids and renewable energy, the researchers said.
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