Clean Energy Surge, Yet Coal Hinders Climate Goals – IEA

Last updated May 25, 2023

Investments in Clean Energy on the Rise

The International Energy Agency (IEA) has released a report indicating that investments in clean energy are likely to outpace spending on fossil fuels, driven by energy security concerns and policy support from wealthy countries. The ongoing war in Ukraine has contributed to these concerns. However, investments in coal are still expected to rise by about 10% in 2023, nearly six times the IEA’s estimation for ending the world’s reliance on fossil fuels and achieving emissions reduction goals for combating climate change.

The Global Energy Investment Landscape

According to the IEA’s latest World Energy Investment report, approximately $2.8 trillion is set to be invested in energy globally in 2023. Of this amount, more than $1.7 trillion is expected to go toward clean technologies such as modern electricity grids, energy storage, low-emissions fuels, and electric vehicles. In contrast, slightly more than $1 trillion is being directed towards coal, gas, and oil—fossil fuels that are significant contributors to global warming.

One issue is that the demand for energy is outpacing increases in supplies in many parts of the world. Additionally, powerful energy industry interests often influence decisions about investments in future capacity, frequently favoring fossil fuels. The report also notes that global coal demand reached an all-time high in 2022, with almost all new coal power plant approvals happening in China.

Shifting Trends: Renewables Gaining Ground

Despite these challenges, the trend is shifting in favor of renewable energy. For every $1 spent on fossil fuels, $1.70 is now spent on clean energy, compared to a 1:1 ratio five years ago. Clean energy investments have been boosted by factors such as strong economic growth and volatile fossil fuel prices, which have raised concerns about energy security, particularly following Russia’s invasion of Ukraine.

Enhanced policy support, such as the Inflation Reduction Act in the U.S. and initiatives in Europe, Japan, China, and other regions, have also played a role in the shift towards clean energy. The report states that “solar is the star performer,” with more than $1 billion per day expected to be invested in solar in 2023, pushing spending above that for upstream oil production for the first time. Electric vehicle sales are also projected to jump by a third in 2023 after surging in 2022.

Challenges for Developing Countries

However, more than 90% of the increase in clean energy investments comes from advanced economies and China, with much less in less wealthy nations. High interest rates, weak electricity grid infrastructure, and unclear policies are holding back investments in renewable energy in many countries. Vibhuti Garg, the South Asia director for the Institute for Energy Economics and Financial Analysis, notes that the focus for rich countries is on investing in their own economies rather than making capital available for poorer nations.

Since 2009, wealthy countries have promised to spend $100 billion in climate aid for developing nations, primarily aimed at transitioning away from fossil fuels like coal and building clean energy systems. However, these financial pledges have not been fulfilled, meaning that developing countries will continue to rely on dirty coal. Garg asks, “How do you expect these developing countries to transition, when they don’t have money?”

Story at abcnews.go.com – 2023-05-25 08:09:47