Last year marked a double turning point for the decarbonization of the world's energy system. The first year that worldwide investment in the energy transition was on par with that in fossil fuels, according to BloombergNEF's most recent statistics release.
Investments of $1.1 trillion were made in the upstream, midstream, and downstream parts of the oil and gas industry, as well as in the creation of fossil fuel-fired power without the aid of technology to cut emissions. The amount invested annually in technologies such as energy storage, electrified transportation and heating, and renewable energy has also surpassed $1.1 trillion.
However, 2022 also marked a significant turning point because it was the first year that spending on decarbonizing energy exceeded $1 trillion. The largest increase to date was a yearly increase of more than $250 billion from 2021. Most of those funds were allocated to electrified transportation and renewable energy. These industries benefited from rising wind and solar installations, with more than 350 gigawatts of assets built, and from the sale of more than 10 million electric vehicles globally.
Even though investments in renewable energy reached a record in 2022, electrified transportation is expanding more quickly. The majority of the $380 billion invested in transportation last year went toward passenger EVs, but that amount was far from the entire capital flow for that industry. $24 billion was invested in public charging infrastructure, and nearly $23 billion was spent on electric 2- and 3-wheelers. Commercial electric vehicles like trucks received $8 billion, while electric buses received $15 billion.
Increase In Global Power Grid Investment
Carbon capture received $6.3 billion, while hydrogen received just over $1 billion. Although both experienced substantial relative growth, investment in hydrogen rose by more than three over carbon capture. Both technologies have made sizable claims over the past five years, and now investment is following. However, there must be a greater use of them if they are to have a significant impact on the climate.
Inflation had a minor impact on the increase in investment dollars last year, accounting for less than one-third of the total dollar increase year over year. Inflation is currently hovering around 8%. Costs for energy-related construction, financing, and component costs increased due to inflation. However, due to expansion in almost every sector, the overall amount invested increased significantly more. An annual investment of a trillion dollars is significant. The necessary components are also lacking. To be on track for net zero emissions in 2050, the world would need to immediately triple its current $1.1 trillion in spending and add hundreds of billions more to the global power grid.
A CSR Initiative of
Designed and Executed by
Implemented by
Technology is a useful servant, but a dangerous master, it was rightly said. Electronic devices have grown into an inevitable part of our daily lives.
