Global investments in energy transition technologies, including energy efficiency, hit a record high of $1.3 trillion in 2022, up by 19% compared to 2021 and a massive 50% surge compared to the pre-pandemic 2019, the International Renewable Energy Agency (IRENA) said in a new report on Wednesday.
Despite the jump in investments in technologies necessary for the energy transition, investment in renewables—albeit at an all-time high—are still less than 40% of the average investment needed each year between 2021 and 2030 for a scenario where the world has a chance of limiting global warming to 1.5 degrees Celsius, according to the joint report by IRENA and Climate Policy Initiative (CPI).
Last year, investment in renewable energy hit a record-high of $500 billion, the report said.
Despite the record $1.3 trillion investment in the energy transition, the current pace of investment is not nearly enough to put the world on track to meet climate or socio-economic development goals, according to the report. Annual investments need to at least quadruple to around $5.7 trillion on average between 2021 and 2030, and $3.7 trillion between 2031 and 2050, IRENA notes.
Global investments are also highly concentrated in specific technologies, such as solar power. In addition, a glaring disparity has emerged in recent years between a high level of investments in developed economies and meager funding for energy transition technologies in developed economies, especially in Africa, the report notes.
“For the energy transition to improve lives and livelihoods, governments and development partners need to ensure a more equitable flow of finance, by recognising the different contexts and needs,” IRENA Director-General Francesco La Camera said in a statement.
Moreover, the report found that achieving an energy transition in line with the 1.5°C Scenario requires redirecting $700 billion per year from fossil fuels to energy-transition-related technologies, yet fossil fuel investments are still on the rise.
The energy crisis and recent changes in policy sent global investment in low-carbon energy sources soaring to a record $1.1 trillion in 2022, with the money spent on the energy transition equaling for the first time investment in the supply of fossil fuels, a new report from research firm BloombergNEF (BNEF) showed last month.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- UN Atomic Watchdog: Iran On The Cusp of Having Nuclear Weapons
- Controversial Cost-Cutting Measures To Blame For Ohio Derailment Disaster
- Philippines Looks To Replicate Indonesia’s Nickel Market Success