THE International Energy Agency (IEA) announced on Thursday that investment in clean energy is poised to outpace spending on fossil fuels in 2023, with solar projects expected to surpass investments in oil production for the first time. According to the IEA’s World Energy Investment report, annual investments in renewable energy have increased by nearly a quarter since 2021, compared to a 15 percent rise for fossil fuels.
The report revealed that approximately 90 percent of clean energy spending originates from advanced economies and China, underscoring the global disparity between wealthy and poorer nations, as investments in fossil fuels still remain twice the required levels to achieve net-zero emissions by mid-century. IEA Executive Director Fatih Birol emphasised the rapid progress of clean energy, saying, ‘Clean energy is moving fast – faster than many people realize. 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.’
Global energy investments are projected to reach around $2.8 trillion in 2023, with over $1.7 trillion anticipated to be allocated to renewables, nuclear power, electric vehicles, and efficiency improvements. The remaining $1 trillion is expected to be directed towards oil, gas, and coal, with demand for the latter reaching an all-time high, equivalent to six times the required level for reaching net zero by 2050.
While solar power spending is set to exceed $1bn per day or $382bn for the year, investments in oil production will amount to $371bn in 2023. Dave Jones, Head of Data Insights at energy think tank Ember, hailed solar power as a ‘true energy superpower,’ telling Reuters, ‘It is emerging as the biggest tool we have for rapid decarbonization of the entire economy.’ He also noted the irony that some of the sunniest regions in the world have the lowest levels of solar investment.
The IEA’s report also highlighted that investment in new fossil fuel supply will increase by 6 percent in 2023, reaching $950bn. However, the agency did not reiterate its previous call to halt funding for new oil, gas, and coal projects in order to achieve net-zero emissions by mid-century. OPEC, the producer group, has argued that the IEA’s stance undermines global energy security and growth. Meanwhile, scientists and climate activists continue to warn that the fossil fuel industry exacerbates the catastrophic impacts of climate change.