Investment in solar power generation is set to eclipse investment in oil production in 2023, for the first time ever, as the tide in global energy is turning, the International Energy Agency (IEA) said in its World Energy Investment report published on Thursday.
The energy crisis and policy actions 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, research firm BloombergNEF (BNEF) said earlier this year.
For 2023, the IEA expects total investments in energy at $2.8 trillion, of which $1.74 trillion will go to clean energy and technologies, and the remaining $1.05 trillion to fossil fuels.
The IEA expects annual clean energy investment to jump by 24% between 2021 and 2023, driven by renewables and electric vehicles, compared with a 15% increase in fossil fuel investment over the same period.
"The shining example of the growth in clean energy investment is solar, which in 2023 is set to attract more capital than global oil production for the first time ever. This reflects the changing tide in world energy," the IEA's Executive Director Fatih Birol said, commenting on the report.
"For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy. Five years ago, this ratio was one-to-one," he added.
While the IEA is rejoicing about clean energy investments, a growing number of oil industry officials stress the importance of an "orderly" transition and highlight the chronic underinvestment in oil and gas in recent years.
The top executives of the biggest international oil and gas firms are joining Saudi state oil giant Aramco in calling for an "orderly" transition in which people should get the secure and affordable energy supply they currently need and they currently get from fossil fuels.
The energy transition needs to happen in an orderly fashion, BP's chief executive Bernard Looney said earlier this year. Chevron's CEO Mike Wirth said in March that "one of the greatest challenges of all time" was to keep secure and affordable supplies flowing while managing the energy transition.
"We have to be very careful about turning system A off prematurely and depending on a system that doesn't yet exist and hasn't been proven."
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