Global investment in energy should grow 8% due to renewables

Higlobal investment in energy must increase 8% in 2022 e surpass the US$ 2,4 trillion mark (more than R$12,5 trillion) due to contributions from renewable sources, such as solar and wind, points out a new report from IEA (International Energy Agency, translated into Portuguese).

The survey concludes, Yet, what do you investments in renewable energy still are far from being enough all with face the multiple dimensions of the current energy crisis and pave the way for a cleaner and safer future.

According to the International Agency, investment in clean energy grew just 2% per year in the five years after the signing of the Paris Agreement in 2015. But, from 2020, the pace of growth accelerated significantly to 12%. 

“A massive increase in investment to accelerate clean energy transitions is the only lasting solution, but we need a much faster increase to ease pressure on consumers and put the world on track to achieve climate goals,” the study assesses. . 

Investments

According to the IAE report, investments in clean energy around the world have been supported by fiscal support from governments and helped by the rise in sustainable finance, especially from more developed countries. 

“Renewables, networks and storage today represent more than 80% of total investment in the electricity sector. Spending on solar power, batteries and electric vehicles is growing at rates consistent with achieving global net-zero emissions by 2050.” 

However, tight supply chains are also playing an important role in increasing investment. “Almost half of the global increase in spending is a reflection of higher costs, from labor and services to materials. These challenges are preventing some energy companies from recovering their expenses more quickly”, points out the document. 

Emerging economies

According to the IAE, despite some bright spots such as solar power in India, clean energy spending in emerging and developing economies (excluding China) still remains stuck at 2015 levels, with no increase since the Paris was reached. 

“Public funds to support sustainable recovery are scarce, policy frameworks are often weak, economic clouds are gathering and borrowing costs are rising. All of this diminishes the economic attractiveness of capital-intensive clean technologies.” 

Another warning sign comes in the form of a 10% increase in coal supply investment in 2021, led by emerging economies in Asia, with a similar increase likely in 2022. 

“Although China has promised to stop building coal plants abroad, a significant amount of new coal capacity is coming to the Chinese domestic market.” 

Geopolitical conflicts

In IAE's assessment, the Russia's invasion of Ukraine, in February this year, raised energy prices for many consumers and businesses around the world, hurting families, industries and entire economies – most severely in the developing world, where people can afford less. 

“Some of the immediate shortfalls in Russia’s exports need to be met by production elsewhere, notably for natural gas, and new LNG infrastructure may also be needed to facilitate diversification of supply away from Russia.”

Fossil fuels

Today's high fossil fuel prices are creating headaches for many economies, as global oil and gas sector income is expected to jump to $4 trillion in 2022, more than double the five-year average, with the most of it going to the main oil and gas exporting states.

The share of oil and gas companies' spending on clean energy is slowly increasing, with progress being driven mainly by European majors and a handful of other companies. 

Overall, investment in clean energy represents about 5% of oil and gas companies' capital expenditures worldwide, up from 1% in 2019. “Higher and more diversified investments are needed to counter current price pressures and create more resilient clean energy supply chains”, assesses the study.