In a new report, the International Energy Agency says solar projects will exceed oil production expenditures this year.
According to the International Energy Agency (IEA) report, a variety of factors have boosted clean energy investments, including the global energy crisis following Russia’s invasion of Ukraine, as well as the growing affordability of renewables.
Spending on clean energy projects includes renewable energy, electric vehicles, low-carbon hydrogen, and battery storage, among other things. The increase in spending is “striking,” and vastly outpacing spending on traditional fossil fuels, Fatih Birol, the IEA’s executive director said in an interview.
“Clean energy is moving fast – faster than many people realize. This is clear in the investment trends, where clean technologies are pulling away from fossil fuels. 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.”
Birol added, “One shining example is the investment in solar, which is set to overtake the amount of investment going into oil production for the first time.”
More than $1 billion a day is expected to be invested in solar power this year, which is higher than the total spending expected for new upstream oil projects.
According to EcoWatch, the IEA report says that in 2023, approximately $2.8 trillion will be invested in energy globally. More than $1.7 trillion of that amount is projected to be invested in green energy technologies
“If these clean energy investments continue to grow in line with what we have seen in the past few years . . . we will soon start to see a very different energy system emerging and we can keep the 1.5C goal alive,” Birol told the Financial Times, in reference to the Paris Agreement target to limit the global temperature rise.
Birol pointed to a “powerful alignment of major factors,” driving clean-energy spending higher, while spending on oil and other fossil fuels remains subdued. This includes mushrooming government spending aimed at driving adherence to global climate targets such as President Biden’s Inflation Reduction Act.
Meanwhile, oil and gas upstream spending is projected to increase by seven percent this year, primarily by large Middle Eastern national oil companies. New fossil fuel investments will increase by six percent to $950 billion this year, according to the IEA report.
Last year, demand for coal was at a record high. In 2023, investment in coal is on a trajectory for a six-fold increase over the levels forecast to reach net zero goals for 2030.
“Investment in coal supply is expected to rise by 10 percent in 2023 and is already well above pre-pandemic levels. Investment in new coal-fired power plants remains on a declining trend, but a warning sign came in 2022 with 40 GW of new coal plants being approved – the highest figure since 2016,” the report said.
