The $1.4 trillion we expect the world to spend on energy transitions in 2022 would have to rise to well over $4 trillion by 2030 to get us on track to limit global warming to 1.5 degrees while also ensuring sufficient energy supply, the Executive Director of the International Energy Agency (IEA), Fatih Birol, said.
According to him, global energy-related CO2 emissions rose by a record amount in 2021, and investment in clean energy technologies is still well below what it will take to bring emissions down to net zero by mid-century or soon thereafter: "At the same time, lower investment in recent years has left some oil and gas producers unable to quickly ramp up production to meet today's demand, even with the incentive of record high prices."
"The good news is that investment in clean energy transitions is finally picking up. In the five years following the 2015 Paris Agreement, clean energy investment grew only 2 percent a year. However, since 2020, this rate has risen to 12 percent a year, led by increased spending on solar and wind power, including a record year for offshore wind power in 2021. There is strong momentum in other new areas like low-emissions hydrogen; new battery technologies; and carbon capture, utilization, and storage (CCUS), even if this impressive growth is coming from a small base. For example, in 2021, plans for about 130 commercial-scale carbon capture projects in 20 countries were announced, and six CCUS projects were approved for final investment.
"Meanwhile, Russia's war against Ukraine has bolstered policy support for low-emission hydrogen, especially in Europe. And investment in battery energy storage is hitting new highs and is expected to double in 2022. But this investment is concentrated in advanced economies and China, leaving many emerging markets and developing economies, particularly in Africa, unable to attract the clean energy investments and financing they need, widening an already troubling divide. Except in China, clean energy spending in emerging markets and developing economies is stuck at 2015 levels, which means it hasn't increased since the Paris Agreement was reached. Falling clean technology costs mean that this money goes further, but the overall amount—about $150 billion a year—is far short of what is needed to meet rising energy demand in developing economies in a sustainable way," the Executive Director stressed.
Fatih Birol thinks that in these economies, public funds for sustainable energy projects were already scarce and have become scarcer still since the COVID-19 pandemic: "Policy frameworks are often weak, the economic outlook is uncertain, and borrowing costs are rising. After the pandemic hit, the number of Africans without access to electricity rose, wiping out years of progress on that crucial front."