Global energy investment is set to increase by 8 percent in 2022 to reach $2.4 trillion, with the rise coming mainly in clean energy, according to the International Energy Agency (IEA) report.
The fastest growth in energy investment is coming from the power sector – mainly in renewables and grids – and from energy efficiency, according to the IEA’s World Energy Investment 2022 report.
Most of the rise in clean energy spending is taking place in advanced economies and China.
“A surge in investment to accelerate clean energy transitions is the only lasting solution. This kind of investment is rising, 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 get the world on track to reach our climate goals,” IEA Executive Director Fatih Birol said.
Clean energy investment grew by only 2 percent a year in the five years after the Paris Agreement was signed in 2015. But since 2020, the pace of growth has accelerated significantly to 12 percent.
Renewables, grids and storage now account for more than 80 percent of total power sector investment. Spending on solar PV, batteries and electric vehicles is now growing at rates consistent with reaching global net zero emissions by 2050.
Tight supply chains are also playing a large part in the headline rise in investment, though. Almost half of the overall increase in spending is a reflection of higher costs, from labour and services to materials such as cement, steel and critical minerals. These challenges are deterring some energy companies from picking up their spending more quickly.
From a low base, there is rapid growth underway in spending on some emerging technologies, notably batteries, low emissions hydrogen, and carbon capture utilisation and storage. Investment in battery energy storage is expected to more than double to reach almost $20 billion in 2022.
However, despite some bright spots, such as solar in India, clean energy spending in emerging and developing economies (excluding China) remains stuck at 2015 levels, with no increase since the Paris Agreement was reached.
Another warning sign comes in the form of a 10 percent rise in investment in coal supply in 2021, led by emerging economies in Asia, with a similar increase likely in 2022. Although China has pledged to stop building coal-fired power plants abroad, a significant amount of new coal capacity is coming onto the Chinese domestic market.