According to the International Energy Agency, investment in solar energy could exceed the amount spent on oil extraction by 2023.
The “crowning” of the solar king: investment in low-carbon energies is accelerating, with solar power set to exceed the sums spent on oil extraction by 2023, the International Energy Agency (IEA) said on Thursday. , which however also predicts a “rebound” in the financing of fossil fuels.
Driven by the energy and climate crises, investment in low-emission technologies is expected to reach $1.7 trillion by 2023, with around $1 trillion going to oil, gas and coal, according to the IEA’s annual Energy Investment Report.
These flows, which relate to renewable energy (wind, solar, etc.), nuclear power, electric cars, heat pumps, etc., should grow by 24% per year in the period 2021-23. At the same time, the quantities for hydrocarbons and coal continue to increase by 15% annually.
“Solar is the star”
“Clean energy is developing rapidly, faster than many people imagine,” said IEA director Fatih Birol: “for every dollar invested in fossil fuels, about $1.7 goes to clean energy. Five years ago, the ratio was 1- 1”.
In particular, “solar is the star,” the report notes: “more than $1 billion per day is expected to go into solar energy investment by 2023 ($380 billion for the full year), pushing this amount beyond that invested in oil production for the first time” , report the experts from the Paris-based agency. Against $370 billion planned for oil production (exploration and extraction).
Another example is that global investment in electricity generation is now 90% dominated by low-carbon technologies. The volatility of fossil fuel prices, exacerbated by the war in Ukraine, and the support measures taken by the EU, China, Japan and the US reinforced the trend.
The Sun King and the Coal King
However, the IEA issues several warnings, first about China’s ultra-dominance and advanced economies in this movement. Despite some glimmers (solar energy in India, Brazil, the Middle East), investment is struggling elsewhere, warns the agency, an offshoot of the OECD, which calls on the international community to mobilize on this issue.
“Solar finds itself crowned as a true energy superpower, the primary tool we have for rapidly decarbonizing the economy,” replied Dave Jones of energy think tank Ember. And yet, “the irony is that some of the sunniest places in the world have the lowest levels of investment in solar, that’s a problem that needs to be addressed,” he adds.
Another major downside pointed out by the IEA: Spending on oil and gas exploration and production is expected to grow by 7% in 2023, a return to 2019 levels, which is taking the world off track towards carbon neutrality by mid-century. In 2021, in a much-noticed scenario of CO2 neutrality, the IEA had emphasized the need to immediately abandon any new project for the exploitation of fossil energy.
Carbon neutrality, which implies that we do not emit more greenhouse gases than we can absorb, aims to keep global warming below 1.5°C to avoid large impacts and irreversible ones. However, coal alone saw its demand reach a historic high in 2022, and investment in this sector in 2023 would have to be six times higher than what the IEA recommends for 2030 if we want to move towards neutrality…
The oil and gas giants last year directed the equivalent of less than 5% of their production expenditure towards low-carbon energies (biogas, wind power, etc.) and carbon capture. Although slightly higher for the European majors, this share has barely increased overall compared to 2021, the IEA notes.