IEA: Clean Energy Investment Taking Lead over Fossil Fuels

Emmanuel Addeh in Abuja

The International Energy Agency (IEA) has said that Investment in clean energy technologies is significantly outpacing spending on fossil fuels as affordability and security concerns strengthen the momentum behind more sustainable options.

About $2.8 trillion, it said, was set aside to be invested globally in energy in 2023, of which more than $1.7 trillion is expected to go to clean technologies – including renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements and heat pumps.

According to the IEA’s latest World Energy Investment report, the remainder, slightly more than $ 1 trillion, is going to coal, gas and oil.

Annual clean energy investment, the agency disclosed, is expected to rise by 24 per cent between 2021 and 2023, driven by renewables and electric vehicles, compared with a 15 per cent rise in fossil fuel investment over the same period.

But more than 90 per cent of this increase comes from advanced economies and China, presenting a serious risk of new dividing lines in global energy if clean energy transitions don’t pick up elsewhere.

“Clean energy is moving fast – faster than many people realise. This is clear in the investment trends, where clean technologies are pulling away from fossil fuels,” said IEA Executive Director Fatih Birol.

 “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. One shining example is investment in solar, which is set to overtake the amount of investment going into oil production for the first time,” he noted.

Led by solar, low-emissions electricity technologies are expected to account for almost 90 per cent of investment in power generation.

The IEA added that there are also investment in more electrified end-uses, with global heat pump sales having seen double-digit annual growth since 2021 and electric vehicle sales expected to leap by a third this year after already surging in 2022.

“Clean energy investments have been boosted by a variety of factors in recent years, including periods of strong economic growth and volatile fossil fuel prices that raised concerns about energy security, especially following Russia’s invasion of Ukraine,” the organisation stated.

The IEA said that spending on upstream oil and gas is expected to rise by 7 per cent in 2023, taking it back to 2019 levels.

“The few oil companies that are investing more than before the Covid-19 pandemic are mostly large national oil companies in the Middle East. Many fossil fuel producers made record profits last year because of higher fuel prices, but the majority of this cash flow has gone to dividends, share buybacks and debt repayment – rather than back into traditional supply.

“Nonetheless, the expected rebound in fossil fuel investment means it is set to rise in 2023 to more than double the levels needed in 2030 in the IEA’s Net Zero Emissions by 2050 Scenario,” the organisation said.