Number theory: Green energy overturns investment gap, but needs to cover more lost ground
The world is expected to invest $1.74 trillion (2022 prices) in clean energy in 2023, 1.7 times the money which will go in fossil fuel investments.
Investment in clean energy has been more than the money that has gone to the fossil fuel industry since 2016, and the gap was the highest in 2022. While this is good news on the climate crisis front, the current pace and geographical spread of investment in clean energy is not enough to deal with the challenge at hand. These findings are based on a reading of the World Energy Investment Report released by the International Energy Agency on May 25. Here are five charts which explain the salient points in the report.
Clean energy investment will be 1.7 times that in fossil fuels in 2023
First, the good news. The headline numbers of the report show that the world has at least understood that it needs to invest more in clean energy. The world is expected to invest $1.74 trillion (2022 prices) in clean energy in 2023, 1.7 times the money which will go in fossil fuel investments. This ratio has been increasing every year from 2017 onward and was 1.61 last year. That this represents a major change can be understood from the fact that in 2015, only eight years ago, we were investing more in fossil fuels than in clean energy.
The IEA report also gives data on investment by three economic groups: advanced economies (38 OECD countries, plus Bulgaria, Croatia, Malta and Romania), China (including Hong Kong), and all remaining countries. The break-up of investment in clean energy by these groups shows that advanced economies will contribute slightly more than half (51%) to it, China will invest 33%, and the other countries will make up the remaining 16%. These numbers were 50%, 27%, and 23% in 2015, the first year for which the report gives data. It suggests that clean energy investment has grown in China faster than in the other two groups in the period for which the report gives data. The CAGR of clean energy investment since 2015 is 6.6% in advanced economies, 8.9% for China, and 0.7% for emerging markets and developing economies.