Solar power investment set to surpass oil production spending this year

INVESTORS will pour more money into solar power than in oil production this year for the first time, signalling the scale and speed of the transition to low-carbon sources of energy, says a report from the International Energy Agency (IEA).

It noted, however, that the mix of investment is still far from one that would put the world on course to meet its commitments to limit the increase of global temperatures. 

A record of more than US$1.7 trillion will be invested in a variety of clean-energy technologies this year, compared about US$1 trillion going into fossil fuel supplies and power production, the IEA found. Clean-energy spending is set to grow 24 per cent this year, more quickly than the 15 per cent growth in investment for fossil fuels.

“Clean technologies are pulling away from fossil fuels,” said Fatih Birol, the IEA’s executive director.

The growth in clean-energy spending is driven by technologies including solar panels and electric vehicles, which are key to cutting dependence on the use of oil, coal and natural gas, the major sources of carbon emissions that lead to climate change.

Still, that level of annual investment will need to roughly double by 2030 to put the world on track to have a chance to limit global warming to 1.5 deg C, said the report.  

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

And while fossil fuel investment falls behind cleaner alternatives, it is still set to reach the highest level since before the pandemic. That would have to start falling sharply this decade to be in line with the IEA’s scenario under which the planet can reach net-zero emissions by the middle of the century. 

This is particularly true for coal, the most polluting fossil fuel. Investment in coal supply is set to rise 10 per cent this year to a fresh record. The vast majority of that is in China, where power shortages have pushed the government to build new coal-fired plants.  BLOOMBERG