Investments in fossil fuels will exceed 1 trillion dollars in 2023, says the IEA
- “Today’s investment spending on fossil fuels is now more than double the levels needed in the net zero emissions by 2050 scenario,” says the International Energy Agency.
- Over the past few years, high-profile figures have made their feelings about fossil fuels known.
- In June 2022, the UN Secretary-General turned back new funding for fossil fuel exploration.
Solar panels at a facility in England. According to the IEA’s managing director, Fatih Birol, investment in solar energy is “set to overtake the amount of investment going into oil production for the first time.”
Daniel Leal | AFP | Getty Images
Global investment in energy is projected to reach around $2.8 trillion by 2023, according to a new report from the International Energy Agency, with over $1.7 trillion of that going to clean energy technologies such as electric cars, renewable energy and storage.
In a sign of how the energy transition is progressing, the IEA’s World Energy Investment report said solar investment was expected to attract over $1 billion a day by 2023.
In a statement, Fatih Birol, the IEA’s executive director, said investment in solar energy was “set to overtake the amount of investment going into oil production for the first time.”
While advocates of the transition to a sustainable future will welcome the above, they are likely to be disheartened by the IEA’s estimate that coal, gas and oil are still on track to attract “just over” $1 trillion in investment this year.
“Today’s investment spending on fossil fuels is now more than double the levels needed in the net zero emissions by 2050 scenario,” the IEA’s report said.
“The misalignment for coal is particularly striking: current investments are almost six times the 2030 requirements of the NZE scenario,” it added.
The effect of fossil fuels on the environment is significant. The UN says that since the 19th century, “human activities have been the main driver of climate change, primarily due to the burning of fossil fuels such as coal, oil and gas.”
The shadow of 2015’s Paris Agreement looms over the IEA’s report. The landmark agreement aims to “limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.”
Cutting anthropogenic carbon dioxide emissions to net zero by 2050 is seen as crucial to meeting the 1.5 degrees Celsius target.
In recent years, high-profile figures such as UN Secretary-General Antonio Guterres have made their feelings about fossil fuels known.
In June last year, Guterres threw in new funds for fossil fuel exploration. He described it as “delusional” and called for an abandonment of fossil fuel financing.
Despite these concerns, the oil and gas industry continues to develop projects around the world.
In October 2022, for example, BP CEO Bernard Looney said the firm’s strategy centered around investing in hydrocarbons while also putting money into the planned energy transition.
While there will be concerns about the money flowing into fossil fuels, the IEA’s Birol sought to highlight what could be a significant shift ahead.
“Clean energy is moving fast – faster than many people realize,” he said in a statement issued alongside the IEA’s report. “This is evident in the investment trends, where clean technologies are moving away from fossil fuels.”
“For every dollar invested in fossil fuels, about $1.7 now goes to clean energy,” Birol added, explaining that this ratio had been one-to-one just five years ago.
Others who commented on the IEA’s report included Dave Jones, head of data insights at energy think tank Ember. “This crowns solar energy as a true energy superpower,” he said.
“It emerges as the biggest tool we have for rapid decarbonisation of the entire economy, especially as solar energy is increasingly used to power cars instead of oil,” he added.
“The irony remains that some of the sunniest places in the world have the lowest levels of solar investment, and this is a problem that needs attention.”