In 2022, the world put as much money into low-carbon energy as into fossil fuels. Global investment in energy transition technologies reached $1.1 trillion that year, according to a BloombergNEF report, and BloombergNEF’s own estimate of fossil fuel investment came to the same $1.1 trillion.
It was the first time the two lines met. The transition figure jumped 31 percent from $849 billion in 2021, despite supply chain disruptions and macroeconomic headwinds. BloombergNEF built the fossil number separately, for comparison, and counted upstream, midstream, downstream and unabated fossil power generation. Fossil investment itself rose after the energy crisis of the year before.
“It is a new record and a huge acceleration from the year before,” the BloombergNEF statement said, crediting the energy crisis and policy action for faster rollout of clean technology.
Where the money went
Almost every sector in the Energy Transition Investment Trends report set a record in 2022. That covers renewable energy, energy storage, electrified transport, electrified heat, carbon capture and storage, hydrogen and sustainable materials. Nuclear was the exception, staying broadly flat.
Renewable energy, meaning wind, solar, biofuels and other renewables, remained the biggest sector at a record $495 billion, up 17 percent. Electrified transport, which includes electric vehicles and related infrastructure, came close to overtaking it. Spending there was $466 billion, a 54 percent increase on the year before.
Hydrogen got the least, just $1.1 billion, or 0.1 percent of the total, even with strong private-sector interest and growing policy support. It was also the fastest-growing sector, with investment more than tripling.
China far ahead
By country, China drew $546 billion, nearly half the global total. The US came a distant second at $141 billion. Treated as a single bloc, the EU would have ranked second at $180 billion. Germany kept third place, France climbed to fourth, and the UK slipped a spot to fifth.
Albert Cheung, BloombergNEF’s head of global analysis, said the findings “put to bed any debate about how the energy crisis will impact clean energy deployment.” He added: “Rather than slowing down, energy transition investment has surged to a new record as countries and businesses continue to execute on transition plans.” Cheung said the spending would also drive short-term job creation and help meet medium-term energy security goals.
Still short of the target
The catch is the gap. BloombergNEF said investment in lower-carbon technologies remains woefully short of what climate change demands. To get on a 2050 net-zero CO2 emissions trajectory, it estimates, such investment must immediately triple. Counting an extra $274 billion put into the power grid, energy transition investment hit $1.38 trillion in 2022.
The yardstick for comparison is $4.55 trillion. That is the annual average the world must invest for the rest of this decade to get on track under BloombergNEF’s Net Zero Scenario.
