RIYADH (Arab News) - As efforts to mitigate the effects of climate change gather pace around the world, investment in clean energy is also witnessing a surge and is expected to reach more than $1.7 trillion in 2023, according to the International Energy Agency.
In its latest report, the IEA said the global energy sector is likely to record investment worth around $2.8 trillion this year of which 60.7 percent will go toward clean technologies.
As security and affordability issues brought on by the global energy crisis gain strength, spending on clean energy technologies will outpace spending on fossil fuels, the report predicted.
Green energy includes renewables, electric vehicles, nuclear power, low-emissions fuels, efficiency improvements, and heat pumps.
According to the report, the leftover global energy investments — slightly over $1 trillion — will go toward coal, gas, and oil.
“Clean energy is moving fast — faster than many people realize. This is clear in the investment trends, where clean technologies are pulling away from fossil fuels,” said IEA Executive Director Fatih Birol.
He added: “For every dollar invested in fossil fuels, about $1.7 are now going into clean energy. Five years ago, this ratio was one-to-one.”
The report also predicted that in 2023, spending on solar power is due to hit more than $1 billion a day or $382 billion for the year, while investment in oil production will stand at $371 billion.
From 2021 to 2023, annual investments in clean energy are projected to rise by 24 percent, driven by renewables and electric cars, compared to a 15 percent increase in investments in fossil fuels during the same time frame.
The report noted that over 90 percent of this increase emanates from developed nations and China. This poses a severe threat of creating new energy divides if renewable energy transitions do not accelerate elsewhere.
The IEA attributed the stimulated investments in clean energy in recent years to rapid economic expansion and erratic fossil fuel prices that fueled worries about energy security, particularly in the wake of the Ukraine crisis.
Other factors impacting the jump in investments in clean energy include significant policy support through initiatives in Europe, Japan, China, and other regions as well as the U.S. Inflation Reduction Act.