According to a report by the research organisation BloombergNEF, $1.1 trillion will be invested globally in 2022 to accomplish the switch to low-carbon energy.
The quantity of funds used to sustain the supply of fossil fuels appears to be comparable to the amount invested in low-carbon technologies.
As per the study, almost every sector observed new record levels of investment in 2022, including renewable energy, energy storage, electrified transportation, electrified heat, carbon capture and storage, hydrogen, and sustainable materials.
According to the report, only nuclear power investment did not achieve a new high, remaining almost steady.
The largest industry in terms of investment continues to be that of renewable energy, which comprises wind, solar, biofuels, and other renewables. It reached a new high of $495 billion committed in 2022, an increase of 17% from the previous year.
As stated in the report, electrified transportation, which includes expenditure on electric vehicles and accompanying infrastructure, is on track to surpass renewables, with $466 billion spent in 2022, a 54% rise year on year.
Even though hydrogen is making headlines frequently, it only garnered $1.1 billion in funding in 2022, or 0.1% of the total. Hydrogen, on the other hand, experienced the quickest pace of development from its modest base as an investment, which more than tripled from the previous year.
According to the data, China was the top destination for energy transition investment. It was $546 billion, or over half of the global total. America ranked second with $141 billion. Meanwhile, the EU would have come in second if classified as a single entity, with $180 billion. Germany remained in third place, while France moved up to fourth and the UK fell to fifth.
The study also included global estimates for upstream, midstream, downstream, and unabated fossil power generation investments. The amount was expected to be $1.1 trillion in 2022, mirroring the amount invested in the energy transition.
Based on the study, despite a boost in fossil fuel investment as a result of the energy crisis, this was the first time that global energy transition investment mirrored fossil fuel investment.
According to the report, despite the 2022 outcomes, worldwide investment in low-carbon technology is still woefully short of what is required to combat climate change. The analysis calculated that this investment would need to triple right now for the world to reach a 2050 net-zero CO2 emissions trajectory.
Investment in the energy transition reached $1.38 trillion in 2022, when an additional $274 billion was invested in the power grid. In comparison, according to Bloomberg’s Net Zero Scenario, the world needs to invest $4.55 trillion per year for the rest of the decade to get back on track.
By 2022, corporate support for climate-tech projects will reach $119 billion, according to the report. These investments consist of new equity funding that climate-tech businesses have obtained from either public or private investors. Due to an entirely downward trend in public share offerings during what the research referred to as a tough year in the global equity markets, the amount represented a 29% fall from the prior year. Venture capital and private equity financings kept up nicely despite the turmoil, growing by 3% annually.
The report predicts that investment in the renewable energy industry could rise from $52.6 billion in 2021 to $78.7 billion in 2022. The majority of this, amounting to $45.4 billion, was spent on manufacturing batteries and associated components. Solar power plants collected $23.9 billion. China accounted for 91% of industrial investments in 2022, despite efforts by other nations to capture more of the global clean energy market.