Global investment in clean energy will rise to $1.7 trillion by 2023, according to the latest World Energy Investment 2023 report from the International Energy Agency, the IEA. Driven by affordability and security issues arising from the global energy crisis, investment in clean energy technologies is increasingly outstripping spending on fossil fuels, further strengthening the global momentum for investment in renewable energy.

According to the report, about $2.8 trillion will be invested in energy globally in 2023, of which more than $1.7 trillion is expected to be invested in clean technologies, including renewables, electric vehicles, nuclear power, power grids, energy storage, low-emission fuels, energy efficiency improvements and heat pumps. A little more than $1 trillion will be invested in technologies such as coal, natural gas and oil.

Annual clean energy investment between 2021 and 2023 is expected to grow by 24%, driven by renewables and electric vehicles, compared with 15% growth in fossil fuel investment over the same period. But more than 90 per cent of this growth has come from advanced economies and China, and if the clean energy transition elsewhere does not accelerate, a new global energy divide will once again open up, posing serious risks.

Iea Director Fatih Birol said clean energy is growing faster than many people think. The trend of rapid growth is even more pronounced in investment, where clean technologies far outstrip fossil fuels, with $1.70 going into clean energy for every $1 invested in fossil fuels. Five years ago, the ratio was similar. A more striking example is investment in solar energy, which is set to surpass investment in oil production for the first time this year.

Led by solar investment, low-carbon electricity technologies are expected to account for nearly 90 per cent of total power generation investment. Consumers are also tending to spend more money on things like terminal electrification. Global heat pump sales have grown by more than double digits every year since 2021. Electric car sales are already surging in 2022 and are expected to grow more than 30 percent from there in 2023.

The report expects upstream oil and gas spending to increase by 7% in 2023, roughly returning to 2019 levels. Only a handful of oil companies are investing more than they did before COVID-19, mainly the big national oil companies in the Middle East. In addition, many fossil fuel producers enjoyed record profits in 2022 thanks to rising fuel prices, but much of this cash flow was used for dividends, share buybacks and debt payments rather than flowing back into traditional supply processes.

Despite the decline in market share, the expected rebound in fossil fuel investment means that in 2023 fossil fuels will rise to more than twice the level required by 2030 under the IEA's net-zero emissions scenario for 2050. Global coal demand reached its all-time high in 2022, and coal investment in 2023 will reach nearly six times the 2030 level envisaged in the net-zero emissions scenario.

The biggest shortfall in clean energy investment remains confined to emerging and developing economies. There are bright spots in these economies, such as solar investment in India and renewable energy investment in Brazil and parts of the Middle East. However, investment in more emerging countries and regions is being held back by a variety of factors, including higher interest rates, unclear policy frameworks and market designs, weak grid infrastructure, strained utility finances and high capital costs.Editor/Ma Xue