According to the latest figures from the International Energy Agency (IEA), increased investment in clean energy, energy efficiency and power grids is expected to push clean energy spending to a record high in 2022.
The IEA’s World Energy Investment 2022 report, released at the end of June, predicts that global energy investment will increase by 8% in 2022 to reach $2.4 trillion.
The organization noted that the fastest growth in energy investment comes from the electricity sector, mainly in renewables and networks, as well as in energy efficiency improvement spending.
Investments in clean energy have accelerated significantly since 2020, the report notes, increasing by 12% per year — a sharp increase from the increases of 2% per year seen in the first five years following the Paris Agreement in 2015.
Renewables, grids and storage account for more than 80% of total new investment in the energy sector, and spending on solar PV, batteries and electric vehicles is growing at rates consistent with achieving net-zero global emissions by mid-century, the report notes.
Additionally, the IEA said there is now “rapid growth underway in spending on some emerging technologies, including batteries, low-emission hydrogen, and carbon use and storage,” although only from a low base. Investments in battery energy storage are expected to more than double to nearly $20 billion in 2022, according to the report.
However, despite these welcome trends, the IEA has warned that growth is still “far from sufficient” to put the world on a decarbonization path consistent with achieving the Paris Agreement goals, boosting economic recovery. in the wake of the pandemic, and tackling the global energy supply crisis that has been exacerbated by Russia’s invasion of Ukraine.
The report also notes that almost half of the overall increases in investment seen in 2022 so far have been driven by higher costs, labor and mineral services, such as cement, steel and critical minerals.
It also warns that clean energy spending in emerging and developing economies, with the exception of China, remains stuck at 2015 levels, with zero increase since the negotiation of the Paris Agreement.
And he reiterates that coal investment is still on the rise, having risen 10% in 2021 as governments seek to address energy supply shortages that have plagued economies in the wake of the coronavirus pandemic. A similar level of coal investment growth is expected in 2022, despite growing pledges from major economies, including China, to halt investment in new overseas coal-fired power plants. A significant amount of new coal capacity is coming to the Chinese domestic market.
Oil and gas investment is also expected to rise again this year, although it remains well below 2019 levels.
“Overall, oil and gas spending today is caught between two visions of the future: it is too high for a trajectory aligned with limiting global warming to 1.5. [degrees Celsius] but not enough to meet growing demand in a scenario where governments stick to current policy parameters and fail to deliver on their climate promises,” the IEA said. She also noted that while the share of oil and gas company spending on clean energy is slowly rising, overall clean energy investment is only about 5% of oil and gas company capital spending globally, compared to 1% in 2019.
However, the report pointed out that the huge windfall profits enjoyed by oil and gas companies due to soaring energy prices provide a “unique opportunity for oil and gas-producing economies to finance the much-needed transformation of their economies, and for major oil and gas companies to do more to diversify their spending.”
“We can’t afford to ignore today’s global energy crisis or the climate crisis, but the good news is that we don’t need to choose between them. — we can address both at the same time,” said IEA Executive Director Fatih Birol. “A massive increase in investment to accelerate clean energy transitions is the only sustainable solution. This kind of investment is growing, but we need a much faster increase to ease the pressure on consumers from high fossil fuel prices, make our energy systems more secure, and put the world on track to reach our climate goals. »
