Clean energy will attract $2 trillion in investment this year, setting new records: IEA

Clean energy technologies and infrastructure are likely to receive twice as much global investment as fossil fuels this year, but countries are still not on track to finance the tripling of renewable capacity they agreed to at last year’s COP28 climate summit, the International Energy Agency concludes in two reports published this week.

“In 2024, total energy investment globally is expected to exceed $3 trillion for the first time, of which approximately $2 trillion will go to clean technologies, including renewables, electric vehicles, nuclear power, grids, storage, low-emission fuels, efficiency improvements and heat pumps,” writes the IEA in the summary of its World Energy Investment 2024 report.

However, while countries “have the tools to accelerate” the adoption of renewable energy as they update their Nationally Determined Contributions (NDCs) under the 2015 Paris Climate Agreement, their plans to accelerate the adoption of renewable energy are not yet on track to meet the target for 2030 adopted during COP28 – warns the Paris-based agency in a separate announcement.

In last year’s World Energy Investment report, IEA executive director Fatih Birol noted that clean energy investment was “shifting away from fossil fuels” and brought in $1.7 trillion in the year, compared with $1 trillion in oil, gas and coal. “While fossil fuel investments are lagging behind cleaner alternatives, they are still expected to reach their highest levels since before the pandemic,” Bloomberg Green reported at the time. “This would need to start declining rapidly this decade to be consistent with the IEA scenario of the planet reaching net zero emissions by mid-century.”

This year, “investments in clean energy are setting new records even in difficult economic conditions, underscoring the dynamics of the new global energy economy,” Birol said in the release. “The growth in clean energy spending is based on strong economic conditions, ongoing cost reductions and energy security considerations. But there is also a strong industrial policy element as major economies compete for advantage in new clean energy supply chains.”

However, the IEA also pointed to “serious imbalances and shortfalls” in clean energy investment, particularly in developing countries, which receive only 15% of the world’s total investment.

“More needs to be done to ensure that investment reaches where it is needed most, particularly in developing economies where access to affordable, sustainable and safe energy is currently severely lacking,” Birol said.

The report shows that China again holds the largest share of global clean energy investments with $675 billion, followed by the European Union with $370 billion and the United States with $315 billion. Global investment in oil and gas exploration and production will increase by 7% to $570 billion, with most of the increase coming from state-owned fossil fuel companies in the Middle East and Asia.

“The report shows that oil and gas investment in 2024 is broadly in line with 2030 demand levels assumed in today’s policy arrangements, but is significantly higher than expected in scenarios that meet national or global climate goals.” – says the IEA.

The agency adds that oil and gas companies invested $30 billion in clean energy in 2023, representing just 4% of their total capital spending.

The IEA’s report on national commitments suggests a gap between countries’ actions in deploying renewable energy and what they have so far promised in their NDCs. “Governments’ national ambitions go much further, representing almost 8,000 gigawatts of global installed renewable capacity by 2030.”

If countries incorporate these plans and estimates into the new NDCs due to be set next year, they will be 70% on track to meet the 2030 target of 11,000 GW.

“This report clearly shows that the triple target is ambitious but achievable – but only if governments quickly turn promises into action plans,” Birol said. “By meeting the goals agreed at COP28 – including tripling renewable energy and doubling energy efficiency improvements by 2030 – countries around the world have a huge opportunity to accelerate progress towards a safer, cheaper and sustainable energy system.”

This article was first published by The Energy Mix. Read the original story here.