Global Investment On Energy To Increase By 8% In 2022: IEA

The world may increase its spending by 8% in 2022 to the tune of about USD 2.4 trillion on clean energy transition, a new report published by the International Energy Agency has claimed.

The IEA’s World Energy Investment 2022 report further revealed that the maximum energy investment was on renewables and grids. Not evenly spread, the rise in spending on clean energy is mostly happening in advanced economies and China.

 

“We cannot afford to ignore either today’s global energy crisis or the climate crisis, but the good news is that we do not need to choose between them – we can tackle both at the same time,” said IEA Executive Director Fatih Birol, further adding, “A massive surge in investment to accelerate clean energy transitions is the only lasting solution. This kind of investment is rising, but we need a much faster increase to ease the pressure on consumers from high fossil fuel prices, make our energy systems more secure, and get the world on track to reach our climate goals.”

Investment on clean energy grew by only 2% five years after the Paris Agreement was signed in 2015, it witnessed a boom to 12% since 2020. Trends show that more than 80% of total power sector investment is in renewables, grids and storage. The rate of growth of expenditure on solar PV, batteries and electric vehicles is keeping step with goal of global net zero emissions by 2050.

The rise in spending can also be attributed to higher costs from labour and services to materials such as cement, steel and critical minerals. That said, this has kept some energy companies from picking up their spending at a faster pace. Investment in battery energy is all set to see a boom and attain new heights at $20 billion in 2022.

Despite several areas that show promise, such as solar in India, the expenditure on clean in emerging and developing economies (barring China) has remained stagnant at 2015 levels. There has been no increase since the Paris Agreement. A 10% increase in investment in coal supply in last year has also sounded a cautionary note. The frontrunner in this regard are the emerging economies in Asia, that may show a similar increase in 2022. China’s pledge to stop building coal-fired power plants abroad seems to have died out with a significant amount of new coal capacity coming onto the Chinese domestic market.

The prevailing prices for fossil fuel prices are vexing for many economies, but are an unprecedented windfall for oil and gas producers. The global oil and gas sector income is ready to reach $4 trillion in 2022. The number is striking for it is double its five-year average. The largest chunk of this is going to states that are major oil and gas exporters. In all, investments in clean energy are pegged at around 5% of oil and gas company capital expenditure worldwide, a rise from 1% in 2019.

In a first, the World Energy Investment report provides an all-inclusive review of investment trends for critical minerals. Worldwide exploration expenditure rose to a striking 30% in 2021- the hike in the United States, Canada and Latin America offer prospects for more diversified supply in the years ahead.