Global spending on the transition to low-carbon energy rose by more than a quarter in 2021, driven by the electric vehicle and renewable power sectors.
Total investment reached $755 billion, a jump of 27 per cent from a year earlier, according to a new report from BloombergNEF. The record-breaking figures show how strong investor appetite is for the technologies that are key to preventing the worst effects of global warming.
However, spending must ramp up significantly to reach net-zero carbon emissions by the middle of the century. BNEF estimates that $2.1 trillion of investment is needed in the energy transition from 2022-25, nearly three times last year’s level. The figures include spending on renewable electricity, electrified heat, energy storage and nuclear power.
“Across all regions we need to see much more investment,” said Albert Cheung, head of analysis at BNEF. “You’re going to have to see a huge uplift and that’s going to have to be driven by government policy.”
The biggest share of spending in 2021 went to new renewable energy projects, such as wind farms and solar parks. The sector attracted $366 billion, up 6.5 per cent from a year earlier, most of which was concentrated in Asia. In the Americas, Europe, the Middle East and Africa investment in renewables was flat compared to 2020.
Renewable energy capacity will need to grow rapidly to provide enough clean power to not only displace fossil fuels from the world’s electric grids, but also support new sources of demand from electric vehicles.
Investment in electrified transportation, including vehicles and supporting infrastructure, rose 77 per cent in 2021 to $273 billion. This year, BNEF expects that figure to rise even further, surpassing the amount spent on renewable energy.
© 2022 Bloomberg L.P.