IEA: Investment in solar energy should surpass oil – 05/25/2023 – Market

Investments in solar energy should exceed, for the first time, in 2023, the amounts spent on oil extraction, highlights the IEA (International Energy Agency), which predicts, however, a recovery in the financing of fossil fuels.

Investments in technologies neutral in carbon emissions, stimulated by the energy and climate crisis, should total US$ 1.7 trillion this year (R$ 8.4 trillion), against US$ 1 trillion (R$ 4.94 trillion) for oil, gas and coal, says the IEA in its annual investment report, published this Thursday (25).

Carbon-neutral energies include renewables (wind, solar, etc.), as well as nuclear, heat pumps or electric car batteries. Investments in these activities as a whole should increase by 24% in the period 2021-2023.

The values ​​destined to hydrocarbons and coal continue, in turn, to advance at a pace of 15% per year.

“Clean energy is moving fast, faster than most people realize,” said IEA Executive Director Fatih Birol.

“For every dollar invested in fossil energy, 1.7 is currently destined for clean energy. Five years ago, the ratio was 1-1”, he added.

Solar energy is the “star”, with “more than US$ 1 billion a day in investments” and a forecast total of US$ 380 billion in 2023, above the US$ 370 billion that will be destined to oil exploration and extraction, highlights the annual report of the IEA.

Another example: investment in electricity generation is currently dominated by 90% of low-carbon technologies.

The trend was reinforced by the impact of the war in Ukraine on the price of fossil energy and by measures to support renewable energy in the European Union, China and the United States.

The Sun King and the Coal King

The IEA, linked to the OECD (Organization for Economic Cooperation and Development), warns, however, of imbalances in the process, largely concentrated in China and in countries with advanced economies.

There are signs of progress in India, Brazil and the Middle East, but in other regions investments in clean energy are lagging behind, points out the entity, which calls for the mobilization of the international community to remedy the situation.

“This crowns solar energy as a veritable energy superpower, which is emerging as the greatest tool we have for rapidly decarbonizing the entire economy,” said Dave Jones of Ember Energy Issues Research Center.

“The irony is that some of the sunniest places in the world have the lowest levels of investment in solar energy. And this is an issue that needs attention,” he added.

The IEA also points out that spending on prospecting and exploring for oil and gas will increase by 7% this year, a level similar to that of 2019, which takes the world away from the possibility of achieving carbon neutrality by the middle of the century.

The agency highlighted in 2021 the need to discard all new fossil energy exploration projects to move towards the goals.

Carbon neutrality, which means emitting less greenhouse gases than the planet can absorb, is necessary so that global warming does not exceed the level of 1.5ºC compared to the pre-industrial era, in order to avoid serious and irreversible climate impacts.

Coal demand, however, reached a record level in 2022 and investments in the sector this year will be six times higher than what the IEA recommends to have in 2030 for the planet to reach emissions neutrality.

Last year, the large oil and gas companies earmarked less than 5% of their production costs for energy with low carbon emissions (biogas, wind, etc.) and carbon capture and storage.