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IEA: Solar Energy Investment Topping Fossil Fuels Worldwide in 2023

June 2, 2023
A new report by the International Energy Agency estimates that investment in clean, carbon-reducing energy technologies will top $1.8 trillion around the world in 2023. Solar power accounts for a record $1 trillion-plus this year.

By Rod Walton, Senior Editor, EnergyTech and Microgrid Knowlege

Solar power investment is going sky high and double-fisted these days.

A new report by the International Energy Agency estimates that investment in clean, carbon-reducing energy technologies will top $1.8 trillion around the world in 2023. Solar power accounts for a record $1 trillion-plus this year, perhaps topping even the long-king oil and gas industries, according to IEA's world energy investment report.

That’s the sky high part. Reaching and topping $1 trillion, or ten digits, is the double-fisted part for the solar power movement.

“Clean energy is moving fast—faster than many people realize,” IEA Executive Director Faith Birol said in the release accompanying the group’s report. “This is clear in the investment trends, where clean technologies are pulling away from fossil fuels.”

The tabulations from worldwide energy ministries, developers and investment firms highlight a curve estimating that clean energy spending has been rising 24 percent from 2021 through the end of this year. Renewable energy projects both on the macro and microgrid side, as well as electric vehicle and charging infrastructure spending, account for the majority of that growth, according to the IEA.

The paths to Net Zero are many, from investment in renewables and EVs to hydrogen, carbon capture, small nuclear, battery storage and building energy efficiency tools. The move toward decarbonization in developed economies has sustained a momentum which does not seem to be slowing down.

That is not to say that fossil fuel investment is fading to zero, net or gross, anytime soon. Projects around coal, natural gas and oil are still attracting more than $1 trillion and have risen 15 percent from 2021-23, according to the IEA. The overwhelming majority of that fossil-fuel project growth has come from large and developing nations such as China and India, the IEA says.

This trend “presents a serious risk of new dividing lines in global energy if clean energy transitions don’t pick up elsewhere,” the IEA release reads.

This worry was stressed by private equity giant BlackRock founder and CEO Larry Fink in a talk during the Global Energy Summit last month at Columbia University. The energy transition investment may require $100 trillion or more to reach Net Zero goals by 2050, but Fink acknowledged the dangers of rich nations forgetting what developing nations need to join in the transition.

“We’re really not being truthful to ourselves,” Fink said in the interview with Jason Bordoff, founding director at the Center for Global Energy Policy at Columbia’s School of International and Public Affairs.

“This is where I’m an alarmist,” Fink admitted. “If we want to be faithful to this (goal) we need emerging countries to come along with us.”

And yet China also is a global leader in EVs and builds more renewable capacity that the U.S. in overall dollars equivalent, if not per-capita spending. So the pace of decarbonization, while not completely headwind-free, is inspiring much optimism among global energy leaders such as the IEA’s Birol.

“For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy,” he pointed out. “Five years ago, this ratio was one-to-one. One shining example is investment in solar, which is set to overtake the amount of investment going into oil production for the first time.”

Yet the tide has hardly turned completely. Current fossil fuel investment is more than twice the level needed in key Net Zero Emissions by 2050 calculations, the IEA warned.

Oil giants are reaping the benefits of higher prices, with U.S. leader ExxonMobil reporting $56 billion in earnings last year. Yet even ExxonMobil, while still reaping the benefits of profitable drilling fields, is committed to investing in clean energy technologies.

One of those was a $125 million investment in renewable diesel development announced last year. Companies such as ExxonMobil and Shell also are exploring carbon capture, utilization and storage projects to offset and mitigate oil and gas emissions.

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