Investment in renewable energy will exceed investment in fossil fuels this year, according to the World Energy Investment 2023 study published by the International Energy Agency (IEA) last week. According to the report, around 2.8 trillion dollars will be invested for energy purposes this year: more than 1.7 trillion will go to renewable energy, nuclear, electric vehicles and efficiency improvements. The rest, almost a trillion, will be invested in oil, gas and coal.
More is invested in green energy. In this sense, the International Energy Agency indicates that currently, for every dollar invested in fossil fuels, 1.7 dollars will be allocated to clean energy. This ratio was one dollar for one dollar in the last five years, which reveals the increase in investment in renewable energy: only between 2021 and 2023, it has increased by 25%.
Increased spending on fossil fuels. For its part, in the same period, investment in fossil fuels increased by 15%. Specifically, this year 950,000 million dollars will be invested in fossil fuels, a figure 6% higher than that of 2022. According to the report, this spending exceeds the figure necessary to achieve the goal of 0 emissions by 2050.
‘I overtook solar. On the other hand, this advancement of clean energies to fossil fuels in terms of investment is well exemplified in the following data. The IEA report indicates that, in 2023, the total annual spending on solar energy will be 382,000 million dollars, while the investment in oil production will reach 371,000 million dollars.
For a fast decarbonization. To this ‘sorpasso’ of solar energy referred Dave Jones, director of the climate think thank Ember Climate, in a Twitter post. “This crowns solar energy as the true source of energy. It is emerging as the greatest tool we have for rapid decarbonization of the entire economy,” Jones said.
An uneven rise. However, the International Energy Agency recalls that “more than 90% of the increase in investments in green energy since 2021 has taken place in advanced economies and China.” Although the text indicates positive points, such as the development of these investments in countries like Brazil and Saudi Arabia, it stresses that “the increase in interest rates; diffuse market designs and policies; Economically stressed public services and high economic cost are preventing investment in renewable energy in many countries”.
Cost of materials. In this sense, the document indicates that in 2021 and 2022, the increase in the prices of certain minerals, semiconductors and materials such as steel and cement caused an increase in the cost of renewable investment. In fact, the price of solar panels increased by 20% in 2022 compared to 2021, and at the beginning of 2023, wind turbines were 35% more expensive in the European market compared to 2020.
Chinese leadership. For this reason, the countries that have been able to accelerate the energy transition are the rich countries. In this sense, the IEA indicates that the three countries or regions that have invested the most in renewable energy between 2019 and 2023 are China, the European Union and the United States. In this sense, it is necessary to highlight the Chinese dominance in the solar industry: according to IEA data cited by Down to Earth, the Asian giant controls 95% of the entire production chain of solar panels. In fact, Chinese exports of photovoltaic panels increased by 80% in 2022.
From the climate crisis to the war in Ukraine. Some of the reasons for the increase in the increase in investment in renewable energy are, according to the report, the economic recovery after the COVID-19 pandemic and the response to the global energy crisis. In addition, the Russian invasion of Ukraine has caused many countries to decide to reduce their independence from Moscow, promoting the energy transition. In this sense, the IEA indicates that the caps on Russian gas imposed by the EU have caused an increase in continental spending on alternative energy sources and on infrastructure dedicated to liquefied natural gas.
Collateral damage. In short, the International Energy Agency confirms that the energy transition is developing globally, albeit unevenly. On the other hand, environmental policies can reproduce, in some cases, those same economic inequalities. An example of this was the march on Paris carried out by hundreds of farmers against the EU ruling that prohibited the use of pesticides: “Our means of production continue to be weakened by the bans,” said Jérôme Despey, general secretary of FNSEA, the main agricultural union. French, according to Reuters.
The politics of the climate. As a consequence, European conservative forces are restless. They fear that their potential voters will be seduced by far-right parties, which maintain a discourse that is contrary to the energy transition and denialist regarding climate change. That is the reason why Ursula Von der Leyen, President of the European Commission, called for reflection on the adaptability of green policies. For this reason, the elections to the European Parliament in June 2024 will be key to the EU’s climate objectives, such as zero CO2 emissions by 2050.
Image: Nuno Marques/Unsplash
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