Released May 25, 2023 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Worldwide investments in clean energy this year are expected to continue outstripping investments in fossil fuels, extending a trend that has been evident since 2016 but has grown sharply in recent years, according to a new report from the International Energy Agency (IEA) (Paris, France). But the agency said even greater investments in clean energy will be required in the coming years if the world hopes to limit temperature gain and stem or reverse global climate change.
"Clean energy is moving fast--faster than many people realize," said IEA Executive Director Fatih Birol. "This is clear in the investment trends, where clean technologies are pulling away from fossil fuels. For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy. Five years ago, this ratio was one-to-one. One shining example is investment in solar, which is set to overtake the amount of investment going into oil production for the first time."
The IEA's World Energy Investment 2023 report, released May 25, projected that worldwide energy spending last year was about $2.6 trillion, with clean energy investments totaling about $1.6 trillion and fossil fuel investments reaching about $1 trillion. This year, spending is expected to exceed $1.7 trillion for clean energy and slightly over $1 trillion for fossil fuels, for a total of approximately $2.8 trillion. The agency defines "clean" technologies as renewable power, nuclear, grids, storage, low-emission fuels, efficiency improvements and end-use renewables and electrification.
Click on the image at right to see annual global investments in fossil fuels and clean energy technologies since 2015, with a projection for 2023 spending levels.
By subsector, worldwide investment in oil and gas exploration and production is expected to continue its four-year rise, reaching just more than $500 billion this year, up from about $475 billion in 2022. Investments in the oil and gas midstream business also are predicted to rise in 2023, to just over $300 million. Investments in coal also are seen rising this year, similarly continuing a four-year streak. And the IEA report project investments by oil and gas companies in low-emission fuels will grow, though they remain tiny by comparison.
The IEA report projected that the Global Electric Power Industry will invest about $650 billion in renewable energy in 2023, continuing a five-year streak of ever-growing investments. The agency expects spending on electric grids and storage to reach about $375 billion this year while outlays for nuclear power are projected to continue to grow slowly, reaching about $60 billion.
Among customer-side investments, efficiency spending is seen as dipping slightly this year while electrification investments, such as installation of heat pumps, will continue to grow strongly.
Click on the image at right to see worldwide energy industry investment levels for 2019-2022, and a projection for 2023.
The IEA expects the pace of growth of investment in renewable energy to slow in 2023 compared to earlier years, but that category of investment still is seen garnering the lion's share of worldwide annual clean energy investments, projected the report.
Click on the image at right to see how the IEA broke out investments in clean energy technologies.
The report also detailed the dramatic change in recent years as to where the oil and gas industry puts its available cash. As recently as 2017, the industry plowed more than 80% of its available cash into finding more oil and gas. However, as investors became restive over years of sub-par returns and advocated for a greater share of available cash in the form of stock buybacks and dividend increases, the industry obliged. It now is returning about half of available cash to shareholders, nearly equaling the percentage it invests in oil and gas operations. A tiny percentage of available cash is being invested in low-carbon businesses, the agency estimated.
Click on the image at right to see how the oil and gas industry is deploying its available cash flow.
The IEA noted that in 2022 prices increased for various clean energy technologies, such as solar panels, wind turbines and electric vehicle batteries, reversing a years-long trend. However, the report added that price pressures are easing in 2023, and "mature technologies" remain "very cost-competitive in today's fuel-price environment."
Regarding liquefied natural gas (LNG), the agency report noted a sharp upward spike in import capacity additions in recent years, but projected a sharp decline of new additions after 2023. Export capacity additions, on the other hand, are expected to continue rising until they plateau around 2026.
Writing in general about investments in gas supply projects around the world, the IEA said, "A key dilemma for investors undertaking large, capital‐intensive gas supply projects is how to reconcile strong near‐term demand growth with uncertain and possibly declining longer-term demand. Gas investments are caught between immediate shortfalls and longer-term uncertainty, although low-emission opportunities are growing."
The report also shows the rapid projected growth of hydrogen electrolysis and carbon capture, use and sequestration (CCUS), both of which are widely seen as critical to stemming carbon dioxide (CO2) emissions from the energy sector.
The IEA has for several years used the scenario prism to assess whether current and future investments will be sufficient to meeting the goals of the Paris Agreement, which nearly 200 nations signed in 2015, to limit their CO2 emissions and keep global temperature gain to 1.5 to 2 degrees Celsius above preindustrial temperatures.
The agency defined its three scenarios this way:
Two years ago, the agency warned that "the world is not investing enough to meet its future energy needs. ...IEA analysis has repeatedly highlighted that a surge in spending to boost deployment of clean energy technologies and infrastructure provides the way out of this impasse, but this needs to happen quickly or global energy markets will face a turbulent and volatile period ahead."
In its just-released global energy investment report, the agency wrote "this picture is starting to change: global energy investment is picking up, and the rise in clean energy investment since 2021 is leading the way. ... If it continues to grow at the rate seen since 2021, then aggregate spending in 2030 on low-emission power, grids and storage, and end-use electrification would exceed the levels required to meet the world's announced climate pledges (the APS)."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
"Clean energy is moving fast--faster than many people realize," said IEA Executive Director Fatih Birol. "This is clear in the investment trends, where clean technologies are pulling away from fossil fuels. For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy. Five years ago, this ratio was one-to-one. One shining example is investment in solar, which is set to overtake the amount of investment going into oil production for the first time."
The IEA's World Energy Investment 2023 report, released May 25, projected that worldwide energy spending last year was about $2.6 trillion, with clean energy investments totaling about $1.6 trillion and fossil fuel investments reaching about $1 trillion. This year, spending is expected to exceed $1.7 trillion for clean energy and slightly over $1 trillion for fossil fuels, for a total of approximately $2.8 trillion. The agency defines "clean" technologies as renewable power, nuclear, grids, storage, low-emission fuels, efficiency improvements and end-use renewables and electrification.
By subsector, worldwide investment in oil and gas exploration and production is expected to continue its four-year rise, reaching just more than $500 billion this year, up from about $475 billion in 2022. Investments in the oil and gas midstream business also are predicted to rise in 2023, to just over $300 million. Investments in coal also are seen rising this year, similarly continuing a four-year streak. And the IEA report project investments by oil and gas companies in low-emission fuels will grow, though they remain tiny by comparison.
The IEA report projected that the Global Electric Power Industry will invest about $650 billion in renewable energy in 2023, continuing a five-year streak of ever-growing investments. The agency expects spending on electric grids and storage to reach about $375 billion this year while outlays for nuclear power are projected to continue to grow slowly, reaching about $60 billion.
Among customer-side investments, efficiency spending is seen as dipping slightly this year while electrification investments, such as installation of heat pumps, will continue to grow strongly.
The IEA expects the pace of growth of investment in renewable energy to slow in 2023 compared to earlier years, but that category of investment still is seen garnering the lion's share of worldwide annual clean energy investments, projected the report.
The report also detailed the dramatic change in recent years as to where the oil and gas industry puts its available cash. As recently as 2017, the industry plowed more than 80% of its available cash into finding more oil and gas. However, as investors became restive over years of sub-par returns and advocated for a greater share of available cash in the form of stock buybacks and dividend increases, the industry obliged. It now is returning about half of available cash to shareholders, nearly equaling the percentage it invests in oil and gas operations. A tiny percentage of available cash is being invested in low-carbon businesses, the agency estimated.
The IEA noted that in 2022 prices increased for various clean energy technologies, such as solar panels, wind turbines and electric vehicle batteries, reversing a years-long trend. However, the report added that price pressures are easing in 2023, and "mature technologies" remain "very cost-competitive in today's fuel-price environment."
Regarding liquefied natural gas (LNG), the agency report noted a sharp upward spike in import capacity additions in recent years, but projected a sharp decline of new additions after 2023. Export capacity additions, on the other hand, are expected to continue rising until they plateau around 2026.
Writing in general about investments in gas supply projects around the world, the IEA said, "A key dilemma for investors undertaking large, capital‐intensive gas supply projects is how to reconcile strong near‐term demand growth with uncertain and possibly declining longer-term demand. Gas investments are caught between immediate shortfalls and longer-term uncertainty, although low-emission opportunities are growing."
The report also shows the rapid projected growth of hydrogen electrolysis and carbon capture, use and sequestration (CCUS), both of which are widely seen as critical to stemming carbon dioxide (CO2) emissions from the energy sector.
The IEA has for several years used the scenario prism to assess whether current and future investments will be sufficient to meeting the goals of the Paris Agreement, which nearly 200 nations signed in 2015, to limit their CO2 emissions and keep global temperature gain to 1.5 to 2 degrees Celsius above preindustrial temperatures.
The agency defined its three scenarios this way:
- Stated Policies Scenario (STEPS), which maps out a trajectory that reflects current policy settings, based on a detailed sector‐by‐sector assessment of what policies are actually in place or are under development by governments around the world. This amounts to a "business as usual" approach.
- Announced Pledges Scenario (APS), which assumes that all long‐term emissions and energy access targets, including net-zero commitments, will be met on time and in full, even where policies are not yet in place to deliver them.
- Net Zero Emissions by 2050 Scenario (NZE), which sets out a pathway for the global energy sector to achieve net-zero CO2 emissions by 2050, updating the landmark IEA analysis first published in 2021. While the first two scenarios are exploratory, the NZE Scenario is normative, as it is designed to achieve the stated objective and shows a pathway to that goal.
Two years ago, the agency warned that "the world is not investing enough to meet its future energy needs. ...IEA analysis has repeatedly highlighted that a surge in spending to boost deployment of clean energy technologies and infrastructure provides the way out of this impasse, but this needs to happen quickly or global energy markets will face a turbulent and volatile period ahead."
In its just-released global energy investment report, the agency wrote "this picture is starting to change: global energy investment is picking up, and the rise in clean energy investment since 2021 is leading the way. ... If it continues to grow at the rate seen since 2021, then aggregate spending in 2030 on low-emission power, grids and storage, and end-use electrification would exceed the levels required to meet the world's announced climate pledges (the APS)."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
