There were encouraging signs for clean energy investment in the International Energy Agency’s recently published World Energy Investment Report 2023.
The Report provides an updated look at the current state of investment in the energy sector with a particular focus on the growth of clean energy investment compared to fossil fuels. Some key highlights:
Clean energy investment has overtaken fossil fuel spending at a ratio of 1.7:1. The amount of investment in clean energy per year now stands at USD $1.7 trillion, compared to USD $1 trillion in fossil fuels. Five years ago, this ratio was 1:1.
Solar power is the "star performer" of global energy investment. More than USD $1 billion per day is expected to go into solar power in 2023. This is expected to overtake oil production investment for the first time this year. After solar, EV’s are also leading the expected increase.
The alignment of industry incentives, price competitive technologies, and government policy has sent clear signals to businesses to invest in clean energy.
Significant challenges lie ahead, however. Growth in clean energy is strong but uneven, with almost all growth coming from advanced economies. The report notes that expanding access to sustainable finance in developing and emerging economies will be vital.
Around $2.8 trillion is set to be invested in energy worldwide in 2023, with more than $1.7 trillion expected to go to renewables, nuclear power, electric vehicles, and efficiency improvements.
At the same time fossil fuel investment is also expected to rise, and with it, the risk of continued use of fossil fuels at a time when usage needs to be phased out. Around $1 trillion will go to oil, gas, and coal in 2023, representing a rise of 6%. Current fossil fuel spending is still significantly higher than what it should be to reach net-zero goals by mid-century.
These results provide a strong impetus for faith-based asset owners to invest in clean energy solutions and to engage with asset managers on clean energy. Greater participation by the faiths can only help with a wide range of pressing needs: to address the uneven nature of investments in clean energy; to help scale up clean energy investments in emerging and developing economies; and to provide better access to sustainable finance in these economies, all of which are imperative.