January 27 (Renewables Now) - Global spending on the transition to low-carbon energy rose 27% between 2020 and 2021, reaching a new record of USD 755 billion (EUR 677bn), BloombergNEF (BNEF) said on Thursday.
Growth was driven by electrified transport, including investment in electric vehicles and associated infrastructure, which jumped 77% last year to USD 273 billion, according to the research firm’s Energy Transition Investment Trends 2022 report.
The renewable energy sector still keeps the top spot in investment terms, showing a rise of 6.5% to USD 366 billion.
Overall, clean power and electrification, spanning renewables, nuclear, energy storage, electrified transport and electrified heat, drew USD 731 billion of investment, with the balance of the total figure, or USD 24 billion, invested in hydrogen, carbon capture and storage and sustainable materials.
The Asia Pacific region saw USD 368 billion of energy transition investment and also experienced the fastest growth among regions of 38%. In the Europe, Middle East and Africa (EMEA) region investment increased 16% to USD 236 billion, while in the Americas it was up 21% to USD 150 billion.
The top country for energy transition investment last year was again China with USD 266 billion, followed by the US with USD 114 billion, Germany, the UK and France. The EU’s investment was USD 154 billion.
BloombergNEF head of analysis Albert Cheung said that against a backdrop of rising input costs for technologies like solar modules, wind turbines and battery packs, “a 27% increase in energy transition investment in 2021 is an encouraging sign that investors, governments and businesses are more committed than ever to the low-carbon transition, and see it as part of the solution for the current turmoil in energy markets.”
Nevertheless, investment levels are below what is needed for reaching global net zero by 2050. According to BNEF, investment needs to roughly triple to an average of USD 2.1 trillion per year in the 2022-2025 period to get on track for its net zero scenarios. Investment then needs to grow to an average of USD 4.2 trillion between 2026 and 2030.
(USD 1 = EUR 0.896)