The IEA has released its World Energy Investment 2022 report, according to which global energy investment will surge 8% this year, reaching a total of $2.4 trillion.
Most of the expected rise, the report said, is on account of clean energy spending, particularly renewables and power grids.
However, the report did acknowledge that despite the drastic increase, it is still a ways off from what it needed to overcome the multiple challenges brought about by today’s energy crisis and secure a cleaner and more sustainable future.
The surge in clean energy spending is not evenly distributed throughout the world, according to the IEA.
Namely, the majority of it is set to take place in China and advanced economies, whereas certain markets are actually seeing increased investment in fossil fuels, particularly coal, due to high energy prices and concerns about energy security.
Even so, IEA Executive Director Fatih Birol noted that by further increasing global investment in clean energy the world can overcome both the energy and climate crises at once.
In fact, Birol emphasized a ‘massive surge in investment’ to advance clean energy transitions around the world would be the only possible long-term solution.
Since the Paris Agreement was signed in 2015, clean energy spending rose only by 2% annually, but the pace has drastically picked up since 2020, reaching 12% per year.
This spending has largely been stimulated by government support and the development of sustainable finance, most notably in advanced economies.
As a result, 80% of the total power sector investment is now distributed among renewable energy sources, grids and storage.
On the flipside, the rise in total spending also has largely to do with the higher costs of labor, raw materials and tight supply chains – all challenges that are hindering many energy companies from spending more efficiently.