A lucky 13 digits just may prove how financially resilient the global energy transition is becoming.
The latest report by Bloomberg NEF tallies global investment in low-carbon energy as topping out above $1 trillion last year. This is a huge boost above 2021 and a new record for clean energy funding, according to the report.
Bloomberg NEF indicates this level of spending may be a milestone that puts lower emitting resources on a global par with capital deployed on fossil fuel power projects. The report’s grouping included renewable energy, electrification, carbon capture, hydrogen and other sectors aimed at reaching net zero goals for greenhouse gas emissions in the coming decades.
It may be the first time that clean energy transition investment has basically matched that of fossil fuel projects, a tremendous feat considering large developing countries such as India are still focused on coal-fired generation and the global electric vehicle transition is moving slower than first hoped.
Nonetheless, “our findings put to bed any debate about how the energy crisis will impact clean energy deployment,” Albert Cheung, head of global analysis at Bloomberg NEF, said in a statement. “Rather than slowing down, energy transition investment has surged to a new record as countries and businesses continue to execute on transition plans. Investment in clean energy technologies is on the brink of overtaking fossil fuel investments...and won’t look back.”
There is still a long ways to go, considering that greenhouse gas emissions have actually upticked in recent years. The International Energy Agency reported that 2021 emissions reached 40.8 gigatons of CO2 equivalent, higher than the previous high (or low, depending on how you look at it) in 2019.
In every cloud, literally, may be a silver lining in findings such as Bloomberg NEF’s. The new report indicates that investment in renewables such as wind, solar and biofuels hit a new record of $495 billion. At the same time, funding for electrified transport rose to $466 billion and a close second to renewables, according to the Bloomberg NEF.
Automakers are putting their billions behind promises to create many new EV models. At the same time, adoption of fleet and car electrification has been relatively slow.
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Hydrogen, which offers the potential of an energy-dense and lower carbon flexible power resource, gain three times as much investment as 2021. The H2 sector, however, is still small and totaled just over $1 billion.
Given projects from companies such as Plug Power, Cummins and Hexagon Purus, and customers such as Amazon and Tevva Motors, one can expect that H2 investment to keep rising dramatically in coming years. Hydrogen is the lightest gas in existence and does not contain carbon in its molecular chain.
Developing nations are often identified as danger points for impeding the energy transition, but Bloomberg’s NEF data shows that China was No. 1 in clean energy investment at nearly $550 billion, well above the U.S. at $141 billion and the combined European Union at about $180 billion.
Manufacturing in the clean energy sector attracted nearly $80 billion last year, almost 50 percent higher than in 2021, according to Bloomberg NEF. In the past six months since the Biden Administration’s Inflation Reduction Act, numerous battery technology firms have announced plans to locate manufacturing in the U.S. to help tighten supply chain challenges.
Some industry insiders have worried that the Russian invasion and war with Ukraine—resulting in natural gas supply challenges for much of Europe—would impede the momentum of the clean energy transition.
Yet some company leaders, such as those with OYA Renewables and GridBeyond, countered that it will actually show reasons why accelerating the move away from fossil fuels is more necessary than ever.
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(Rod Walton, senior editor for EnergyTech, is a 15-year veteran of covering the energy industry both as a newspaper and trade journalist. He can be reached at [email protected]).
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