According to data from International Energy Agency (IEA) in 2022, the world’s energy investment was set to increase by over 8% reaching a total of USD 2.4 trillion, which is well above the pre-Covid levels. This increase in investment is occurring in all parts of the energy sector, with the power sector leading the way in renewables and grid development. Increased spending on end-use efficiency is also contributing to this trend. However, investment in oil, gas, coal, and low-carbon fuel supply remain below the levels seen prior to the pandemic in 2019.
What about oil and gas production?
This is despite sky-high fuel prices generating an unprecedented windfall for suppliers, as net income for the world’s oil and gas producers doubled in 2022 to an unprecedented USD 4 trillion. Additionally, The Organization of the Petroleum Exporting Countries (OPEC +) decided to cut the output of oil last month, inflating prices to similar levels observed towards the end of 2022. While this trend may seem counterintuitive, it highlights the need for continued focus and investment in renewable energy and low-carbon fuel supply to address climate change.
Source: IEA.ORG, World Energy Investment 2022, Overview and key findings
Where is the investment going?
The IEA report indicates that a significant portion of the investment in the power sector is going toward renewable energy projects, such as wind and solar power, which are becoming increasingly cost-competitive with traditional fossil fuel sources. Additionally, investment in energy grids and storage is also increasing, as they are essential for integrating renewable energy sources into the grid and ensuring a stable energy supply. There is also a focus on new innovations such as:
- Electric vehicles – In 2012, 120 000 EVs were sold worldwide. In 2021 more than that number were sold each week.
- Battery storage – Investment in battery energy storage is hitting new highs and was expected to more than double to reach almost USD 20 billion in 2022.
- Low emissions hydrogen – Clean hydrogen-focused companies are raising more money than ever before, and the value of a portfolio of leading firms in this space has quadrupled since the end of 2019.
- CO2 capture – Investment of CO2 capture projects rose to around USD 1.8 billion in 2021.
Despite these positive trends, the report highlights the need for continued investment in low-carbon fuel supply, which is essential for meeting climate goals. Low-carbon fuels, such as hydrogen and biofuels, have the potential to replace fossil fuels in certain sectors, such as aviation and heavy transport, where electrification may not be feasible.
We expect to see a further increase in investment in clean energy throughout in 2023 when the latest IEA report is released. We recognise the importance of investing in renewable energy and low-carbon fuel supply to address climate change. We work with businesses to develop sustainable energy strategies and identify opportunities for investment in renewables and energy efficiency. Contact us today to learn more about how we can help your business transition to a sustainable energy future.