JAKARTA, Indonesia (AP) - Energy security concerns, exacerbated by the war in Ukraine, and regulatory support from rich countries are likely to help clean energy investments outpace fossil fuel spending, the International Energy Organization said in a report Thursday.
However, coal investments are on track to rise by around 10% in 2023, almost six times what the IEA estimates they would need to be for the world to cut its dependence on fossil fuels and meet emission reduction targets to counter climate change.
Some $2.8 trillion is projected to be invested in energy worldwide in 2023, of which more than $1.7 trillion would go to clean technologies such as modern power grids, energy storage, low-emission fuels and electric vehicles, according to the organization's latest World Energy Investment report.
Just over $1 trillion will go to coal, gas and oil, fossil fuels that are a major source of emissions that contribute to global warming.
Part of the problem is that demand for energy outstrips increases in supply in many parts of the world. Powerful energy industry interests also influence government investment decisions, often in favor of fossil fuels.
Global coal demand hit an all-time high in 2022 and some 40 gigawatts in new coal plants were authorized, the highest since 2016. Nearly all will be in China, the report noted.
Still, the trend is shifting in favor of renewable energy. For every $1 spent on fossil fuels, $1.70 is devoted to clean energy. Five years ago the ratio was 1:1, the paper said.
Regulatory measures such as the Inflation Reduction Act in the United States and initiatives in Europe, Japan, China and elsewhere have also played a role.
"Solar is the star and $1 billion is expected to go every day to solar investments by 2023 ($380 billion in the year in total)," the report noted, which for the first time would boost that line item above that of oil production.
Electric vehicle sales are expected to jump by a third in 2023 after growing in 2022, the text added.
More than 90% of the increase in clean energy investments comes from advanced economies and China, with a much smaller figure in less affluent countries. Factors such as high interest rates, weak electricity infrastructure and unclear policies are holding back investment in renewable energy in many countries, the organization said.
Vibhuti Garg, South Asia director of the Institute for Energy Economics and Financial Analysis, said rich countries are focused on investing in their own economies and not making that capital available for poorer countries.
Since 2009, rich countries have pledged $100 billion in climate aid to poor countries, mostly to reduce their dependence on fossil fuels such as coal and build clean energy systems. But those funding pledges have not been fulfilled. Garg noted that this means developing countries will continue to rely on dirty coal.
"How do you expect these developing countries to make the transition, if they don't have the money?" he asked.
Aniruddha Ghosal reported from New Delhi, India.
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