The world invested a record $755 billion in the energy transition in 2021, up by 27 percent compared to 2020, but total annual investment in low-carbon energy needs to triple from today's levels to put the world on track for net-zero emissions by 2050, research firm BloombergNEF (BNEF) said in a new report on Thursday.
Last year, global investments in all low-carbon energy sectors rose, with the exception of carbon capture and storage (CCS), BNEF's Energy Transition Investment Trends 2022 report showed.
Renewable energy continued to be the largest sector for investments, with a record $366 billion committed in 2021, up by 6.5 percent compared to 2020.
Electrified transport, including spending on electric vehicles (EVs) and associated infrastructure, was the second-largest sector with $273 billion of investments. EV investments soared by 77 percent annually in 2021, and could even overtake investment in renewables this year, according to BNEF.
China was the country leader with $266 billion investment in 2021, followed by the United States with $114 billion committed investments. The top five countries in low-carbon energy investments also included Germany, the UK, and France.
Despite the record high global investment in low-carbon energy in 2021, this is not nearly enough to put the world on a track to net zero by 2050, BNEF's estimates show.
Investment needs to triple to average $2.1 trillion a year in 2022-2025, and then it needs to double again, to an average of $4.2 trillion between 2026 and 2030, according to BNEF.
"At current growth rates, the electrified transport sector has the best chance of getting on track for such investment levels; other sectors look less likely to get on track," BNEF said.
Investments in low-carbon energy need to triple if the world is to meet its Paris Agreement targets, the Executive Director of the International Energy Agency (IEA), Fatih Birol, said at the end of last year.
"There is a gross mismatch, and the longer this mismatch persists the greater the risk of further sharp price swings and increased volatility in the future," Birol told the Financial Times in October.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More