Thrilling news for clean tech! For the first time, global investment in renewables and clean tech was greater than the amount spent on oil and gas, according to research released by Bloomberg NEF (BNEF). Here’s why this is a big deal.
What is this about?
The low-carbon energy transition. Research group Bloombeg NEF (BNEF) just released data revealing that in 2022, not only did low-carbon tech investment cross the $1 trillion mark, but it also came at par with fossil fuel investment, at $1.1 trillion. Now that’s a massive number…a record high, in fact. And surprising for some, following last year’s energy crisis.
BNEF’s annual report accounted of how much funding businesses, financial institutions, and governments are committing to the energy transition. Broadly speaking, clean tech entails energy generation, storage, transporation, water and waste management, recycling, agriculture and materials. Zooming in a bit, in our case, this looks like increased investment across renewable energy, electrified transport, electrified heat, carbon capture and storage (CCS), hydrogen and sustainable materials.
Lots of technical terms but essentially, any technology or practices that significantly reduce negative environmental impacts (emissions, pollutants, waste). This goes from cleaning up the damage done in the past to reducing further use of oil and gas and converting waste into usable energy.
What’s the latest?
Last week, it was revealed that the huge investment we saw in 2022 was a historic first. Nearly every sector that was covered in the report that is needed for a low-carbon energy transition saw a new record, except for nuclear energy, which did not set a record and stayed flat. Renewable energy (wind, solar, biofuels, etc) was most heavily invested in, achieving a new record of $495 billion in 2022, up 17% from 2021.
Here’s what Albert Cheung, Head of Global Analysis at BloombergNEF, had to say:
“Our findings put to bed any debate about how the energy crisis will impact clean energy deployment. Rather than slowing down, energy transition investment has surged to a new record as countries and businesses continue to execute transition plans. Investment in clean energy technologies is on the brink of overtaking fossil fuel investments, and won’t look back. These investments will drive short-term job creation and help to address medium-term energy security objectives. But much more investment is needed to get on track for net zero in the long term.”
The realization that came from the energy crisis drove deployment of clean energy. But that wasn’t the only place money was going. Investments in fossil fuels also grew last year, triggered by last year’s energy crisis. So an even bigger win.
But where is all this energy transition investment coming from? According to BNEF’s data, it was dominated by China, accounting for $546 billion, nearly half of the total. Further behind are US (at $141 billion) and EU (at $180 billion). The challenge for the coming years then is to decentralise this and build capacity of all countries to develop and invest in clean energy.
Putting things into perspective
Climate finance and decarbonisation, as it is now, is increasingly encouraging. The way things are going, this level of investment is bound to be eclipsed.
But something to not lose sight of is that while 2022’s results are so impressive, global investment in lower-carbon technologies remains short of what is needed to confront climate change. According to BNEF, for the world to get on a 2050 “net-zero” CO2 emissions trajectory, such investment must immediately triple. For comparison, the world must invest an average of $4.55 trillion annually for the remainder of this decade in order to get on track to achieving net zero.
FEATURED IMAGE: via Pexels | IMAGE DESCRIPTION: Landscape photograph of a series of wind turbines during sunset.