Investment in solar energy, as an alternative to oil and gas - Sectors

For the first time in history the solar energy will eclipse oil production. Global investment in clean energy is on track to rise to $1.7 trillion by 2023, This is how the International Energy Association (IEA) considers it in a recent report.

According to the IEA, investment in clean energy technologies is significantly outpacing spending on fossil fuels, as affordability and security concerns sparked by the global energy crisis strengthen the momentum behind more sustainable options.

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The report concluded that around $2.8 trillion is expected to be invested globally in energy by 2023, of which more than $1.7 trillion is expected to go to clean technologies, including renewables, electric vehicles, nuclear power, grids, storage, low emission fuels, efficiency improvements. and heat pumps. The rest, just over $1 trillion, goes to coal, gas and oil.

According to the latest IEA World Energy Investment Report, annual investment in clean energy is expected to rise 24 percent between 2021 and 2023, driven by renewables and electric vehicles, compared with an increase of 15 percent. percent in investment in fossil fuels during the same period.

90 percent of this increase, the report notes, comes from advanced economies and China, posing a serious risk of new global energy divides if clean energy transitions do not pick up elsewhere.

“Clean energy is moving fast, faster than many people realize. This is clear in investment trendswhere clean technologies move away from fossil fuels,” said IEA Executive Director Fatih Birol.

“For every dollar invested in fossil fuels, about $1.7 now goes to clean energy. Five years ago, this ratio was one to one. A shining example is the investment in solar energy, which will exceed the amount of investment earmarked for oil production for the first time,” Birol explained.

solar energy, point

Solar energy continues to be the leader in the production of clean energy. According to the AIE report, low-emission electrical technologies are expected to account for nearly 90 percent of investment in power generation. Consumers are also investing in more electrified end uses. Global heat pump sales have experienced double-digit annual growth since 2021. Electric vehicle sales are expected to rise by a third this year after warning in 2022.

The report also notes that clean energy investments have been driven by a variety of factors in recent years, including periods of strong economic growth and volatile fossil fuel prices that raised energy security concerns, especially after the invasion. of Ukraine by Russia.

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However, oil and gas exploration and production spending is expected to rise 7 percent in 2023, returning to 2019 levels. The few oil companies that are investing more than before the covid-19 pandemic are in mostly large national oil companies in the Middle East.

The IEA says that many fossil fuel producers made record profits last year due to higher fuel prices, But most of this cash flow went to dividends, share buybacks and debt repayments, rather than going back to traditional supply.

The few oil companies that are investing more than before the covid-19 pandemic are mostly large national oil companies in the Middle East.

However, according to the IEA, the expected rebound in investment in fossil fuels means that it will discard by 2023 at more than double the levels needed in 2030 in the IEA’s 2050 net-zero emissions scenario. Global demand for coal reached an all-time high in 2022, and investment in coal this year is on track to reach almost six times the levels projected in 2030 in the Net Zero Scenario.

The oil and gas industry’s capital spending on low-emissions alternatives, such as clean electricity, clean fuels and carbon capture technologies, was less than 5 percent of its upstream spending in 2022. That level was little changed from than last year, although the proportion is higher for some of the largest European companies.

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The IEA analysis highlights that the biggest gaps in clean energy investment are found in emerging and developing economies. There are some bright spots, such as dynamic investments in solar power in India and in renewables in Brazil and parts of the Middle East.

However, investment in many countries is held back by factors including higher interest rates, unclear policy frameworks and market designs, weak grid infrastructure, financially distressed utilities, and high cost of capital.. The international community must do much more, especially to boost investment in low-income economies, where the private sector has been reluctant to venture.