According to an analysis from BloombergNEF, for the first time, the world invested as much money into replacing fossil fuels as it spent on producing oil, gas and coal. Global investments in the clean energy transition reached $1.1 trillion in 2022, which is roughly equal to the amount invested in fossil fuel production. This marks a significant increase, as it is the first time that the amount spent on switching to renewable power, electric cars, and new energy sources such as hydrogen has surpassed $1 trillion.
This shift towards clean energy is linked to the economy as the transition to renewable energy sources can lead to job creation and economic growth. Investing in clean energy infrastructure and technologies can also lead to long-term savings, as reliance on fossil fuels can be reduced. Additionally, the transition to clean energy can also attract foreign investment, further boosting economic growth. It is worth noting that although this is a significant milestone, it is still a fraction of what is needed to reach net-zero emissions by 2050, and investments in the transition must triple for the rest of this decade to reach this goal.
The shift towards clean energy is also important for addressing global warming and reducing greenhouse gas emissions. By investing in renewable energy sources, such as solar and wind power, countries can reduce their carbon footprint and play a role in reducing the effects of climate change. Additionally, investing in electric vehicles and new energy sources like hydrogen can also help reduce air pollution, which has significant health and economic impacts.
The report from BloombergNEF also found that solar and wind power accounted for the largest chunk of 2022 investments, reaching $495 billion, a 17% increase from the previous year. Electric vehicles also saw a significant increase in investments, with $466 billion, and the amount invested in them worldwide is growing far faster, at 54%. Additionally, nearly half of all global energy transition investments were in China, with the US coming in second at $141 billion.
It’s also worth noting that these investment figures only cover money invested in deploying clean-energy technologies, and do not include other investments such as expanding and strengthening power grids, clean-energy supply chains and manufacturing, or equity financing raised by clean-tech companies. When these additional investments are added, the total amount invested in the transition rises to about $1.6 trillion.
Overall, the report from BloombergNEF highlights a significant shift towards clean energy, with investments in this sector now matching those in fossil fuels. However, it also highlights the need for continued investment in the transition to reach the goal of net-zero emissions by 2050. Investing in clean energy not only helps address global warming and reduce greenhouse gas emissions, but also has significant economic benefits for countries and communities.