Global energy transition spending is on track to reach a new high of $1 trillion.

31st January, 2022.      //   Climate Change  // 

In 2021, the globe spent a record-breaking $920 billion on renewable energy deployment and innovation. According to a BloombergNEF research released Thursday, this figure needs at least increase in the next few years in order to fulfill the objective of net-zero emissions by 2050.

Why it’s important: This report gives a clear picture of how public and private funding is assisting in the transition away from fossil fuels and achieving climate targets.

transition of power

Big picture: According to the research, clean energy investment totaled $755 billion last year, up from $595 billion in 2020, while new climate technology financing totaled $165 billion.

While renewable energy was the greatest industry in terms of deployment, with $366 billion, the highlight was electrified transportation, which brought in $273 billion. According to BloombergNEF, this was a 77% increase over the previous year. In 2022, EVs and related charging infrastructure will eclipse renewable energy investment if current trends continue. While all regions saw record levels of investment, the Asia Pacific region, with $368 billion in investment, saw the most rapid development. Much of this was done in China, where $266 billion was spent on energy deployment.

The deployment of carbon capture and storage, which cost $2.3 billion in 2021, was the only industry where investment did not rise. Yes, but, according to the research, while funding for clean energy deployment has consistently increased since 2013, it is still far short of what is required to avoid some of the worst effects of global warming.

Between 2022 and 2025, BloombergNEF’s scenario for attaining net-zero emissions by 2050 requires a total investment of $2.1 trillion in clean energy, which is three times the amount spent last year.

Only the transportation sector, according to the research, may be on track for a spending growth at a rate that is consistent with a net-zero scenario. Spending on renewable energy deployment has increased at a relatively sluggish rate of approximately 6% over the last five years.

Clean energy transition investment would have to quadruple again between 2026 and 2030, to roughly $4.2 trillion per year, to fulfill the net zero goal.

Albert Cheung, head of global analysis at BloombergNEF, told Axios, “It’s extremely fantastic to see a high number like 750 billion.” “We’ve never seen anything like it before.” “We’re on the right track, and we’re speeding up.” Yet, in order to get back on track, there’s a massive mountain to climb in the near future.”

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