Solar energy investments are expected to overtake oil for the first time ever this year, according to the International Energy Agency (IEA).
A new report from the agency says spending on clean energy technology is now significantly outpacing spending on fossil fuels. This is due to affordability and security concerns triggered by the global energy crisis.
“Clean energy is moving fast - faster than many people realise. This is clear in the investment trends, where clean technologies are pulling away from fossil fuels,” IEA executive director Fatih Birol said in a statement.
“For every dollar invested in fossil fuels, about $1.7 (€1.58) is now going into clean energy. Five years ago, this ratio was one-to-one.”
Why has investment in clean energy soared?
Led by investment in solar, low-emissions technologies are expected to account for 90 per cent of all investment in power generation. Consumers are also investing more, with global sales of heat pumps soaring and electric vehicles sales expected to leap by a third in 2023 after surging last year.
The IEA says a number of factors have contributed to the turnaround, from periods of strong economic growth to volatile fossil fuel prices that raised concerns about energy security following Russia’s invasion of Ukraine.
Policies that support the growth of clean energy have helped too, like the US Inflation Reduction Act as well as initiatives in Europe, Japan and China.
Fossil fuel investments still need to fall rapidly
Investment in fossil fuels is still rising and needs to fall rapidly to achieve net-zero emissions by 2050, the IEA adds.
The few companies that are investing more than they were before COVID-19 are mostly large national oil firms in the Middle East. Though many fossil fuel companies saw record profits last year, much of this money has gone into dividends, share buybacks and debt repayment - rather than back into traditional supply.
But the expected rebound in fossil fuel investment means spending is set to rise in 2023. The total is set to be double the limit needed by 2030 to achieve net zero emissions by 2050, according to the IEA. Coal reached an all time high last year and will be nearly six times what is needed for this scenario to happen.