1 of 2 | The International Energy Agency estimates that investments in clean energy will outpace fossil fuels, though progress is most apparent in a select few markets. File photo by Pat Benic/ UPI |
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May 25 (UPI) -- Global capital investments in clean energy are on pace to surge by 24%, compared with a 15% increase in fossil fuels, the International Energy Agency said Thursday.
The IEA estimated that $2.8 trillion will be invested globally in the energy sector this year, with around $1.7 trillion of that going to cleaner technologies such as nuclear power, renewable energy and electric vehicles. The rest of that, some $1 trillion, will go toward more traditional forms of energy, such as coal and crude oil.
Fatih Birol, the head of the Paris-based agency, said clean energy investments are accelerating faster than most people realize.
"For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy," he said. "Five years ago, this ratio was one-to-one."
For just solar power, he added, investments are on pace to overtake capital spending on oil production for the first time ever.
In the U.S. economy, incentives outlined in last year's Inflation Reduction Act offer lucrative tax credits for everything from the material used in wind turbines to electric vehicles, provided those have a manufacturing base in North America.
Progress, however, has been slow. Nuclear power actually declines from 2021 levels and remains static through 2024, while renewables increase from a 20% market share to 26% next year.
While the U.S. economy is the world's largest, the IEA said more than 90% of the increase in spending on renewables comes from other advanced economies, including China. That, the IEA said, could lead to lopsided developments globally if other economies don't follow suit.
On the fossil fuel front, meanwhile, the IEA expects spending on exploration and production to increase to levels not seen since before the pandemic, but there too, progress is seen only in a few select markets.
"The few oil companies that are investing more than before the COVID-19 pandemic are mostly large national oil companies in the Middle East," the IEA said.
The rest are returning more value to their shareholders. After reporting record-setting profits in the first quarter, British supermajor BP announced a $1.75 billion share buyback offer for the quarter and hiked the dividend investors will receive by 21% to 6.61 cents a share.
"(T)he expected rebound in fossil fuel investment means it is set to rise in 2023 to more than double the levels needed in 2030 in the IEA's Net Zero Emissions by 2050 Scenario," the agency said.
