Global clean energy investments need to triple between now and the end of the decade if the energy sector is to achieve net-zero emissions by 2050.
That’s according to the 2022 World Energy Outlook released by the International Energy Agency (IEA) last week.
Clean energy investments are set to rise by more than 50% by 2030, jumping from $1.4 trillion in 2022 to over $2 trillion by the end of the decade based on the IEA’s Stated Policy Scenario, which analyzes existing policies, as well as policy ambitions and targets.
The current energy crisis triggered by Russia’s invasion of Ukraine has led to long-term policy responses in the United States, the European Union, Japan and South Korea, as well as ambitious clean energy targets in India and China. These plans are spurring the investment boost.
“Clean energy becomes a huge opportunity for growth and jobs, and a major arena for international economic competition,” the report stated.
For the first time, the agency predicted demand for fossil fuels will peak in the near future.
Yet clean energy investments would need to jump to over $4 trillion by 2030 to be aligned with the IEA’s 2050 Net Zero Emissions Scenario, which sets out a pathway for the global energy sector to achieve net-zero CO2 emissions by mid-century.
Today, for every dollar spent on fossil fuels, $1.50 is spent on clean energy, Tim Gould, the IEA’s chief economist, said in a briefing. For the world to reach $4 trillion in clean energy investments by 2030, that ratio will have to be more like one to nine, he said.
While many companies and financial organizations have set targets to scale down fossil fuel investments, “much more emphasis is needed on goals and plans for scaling up investment in clean energy transitions, and on what governments can do to incentivize this,” the report stated.
Failure to sufficiently increase investments in clean energy technologies would mean more investments in fossil fuel infrastructure to accommodate growing energy demand in coming years—a move that jeopardizes the world’s goal to keep global warming below 1.5 degrees Celsius, said Fatih Birol, IEA executive director.