According to a new analysis, clean energy investments will continue to outpace fossil fuels this year.
The International Energy Agency stated that they expected $2.8 trillion to be invested in energy worldwide in 2023. More than $1.7 trillion of this amount will go into clean technologies such as wind, solar, nuclear, power networks, fuels and heating with low carbon content, and energy efficiency. The rest is expected to go into coal, oil and gas.
This year, the agency expects to invest $380 billion in solar energy. That’s “a little more” than what is invested in oil production.
Fatih Birol is the executive director of the IEA. He said, “For each dollar invested in coal about 1.7 dollars now go into clean energy. This ratio was 1:1 five years ago. Solar investment is a shining example. It is expected to surpass the amount invested in oil production.
The agency stated that the high and volatile prices of fossil fuels had encouraged investment in cleaner alternatives. This was supported by policies such as America’s Inflation reduction Act which offers tax incentives and other incentives.
The high prices of fossil fuels have prompted increased investment, which is expected to increase by 6 percent this year. This will be more than twice the amount required to achieve a scenario where the world’s emissions are reduced to zero net by 2050. The forecast is for coal production to increase primarily in China and India, as well as elsewhere in Asia.
IEA stated that despite this, investment in oil and natural gas did not increase in proportion to the record income generated last year by producers. The IEA said that the majority of cash flow was used to pay dividends, buy back shares and repay debts rather than investing it in traditional supply.