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Solar investments could overtake oil spending this year: Investments in clean energy are set to surpass spending on fossil fuels this year, with solar expected to be the “star performer” and surpass oil for the time ever, the International Energy Agency (IEA) said in its World Energy Investment report (pdf) released last week.
By the numbers: The Paris-based energy watchdog said it estimates that up to USD 2.8 tn will be invested in energy globally in 2023, with over USD 1.7 tn going to renewable energy, nuclear power, low-emission fuels, efficiency improvements, and others. The remainder will be invested in unabated fossil fuels, with 15% earmarked for coal and the rest directed to oil and gas. “For every USD 1 spent on fossil fuels, USD 1.7 is now spent on clean energy. Five years ago this ratio was 1:1,” the IEA said.
Where’s the money coming from? Over 90% of the rise in clean energy investments since 2021 have come from advanced economies and China, the report said. It added that there were “bright spots elsewhere”, including growing investor appetite in the MENA region, mainly in Saudi Arabia, the UAE, and Oman. This includes Saudi Arabia’s USD 8.4 bn green hydrogen facility in Neom, which the report said would be eight times larger than the next biggest in the world. Egypt, Oman and the UAE are also among players betting big on low-emission hydrogen exports, it added.
Solar is king: Investors will pour around USD 1 bn per day in solar this year, totalling some USD 380 bn for the whole year. “One shining example is investment in solar, which is set to overtake the amount of investment going into oil production for the first time,” IEA Executive Director Fatih Birol said in a statement accompanying the release of the report.
Spending on dirty fuel is still high: Investments in unabated fossil fuel supply will increase by over 6% this year to reach USD 950 bn. The majority of investments will be going to upstream oil and gas, where investments will rise by 7% to over USD 500 bn. This would bring the aggregate back to pre-pandemic levels.
