Clean energy is projected to increase by $ 1.4 trillion in 2022, the IEA said

Coal and wind turbine in Hohenhameln, Germany, on April 11, 2022. A number of major economies have formulated plans to reduce their dependence on Russian hydrocarbons in recent months.

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Global energy investment is set to jump more than 8% in 2022 to $ 2.4 trillion, with a noticeable increase in coal supply chains, but much more money will be needed if climate goals are to be met, according to the International Energy Agency.

Published on Wednesday, the latest version of the IEA’s global energy investment report says clean energy investment will exceed $ 1.4 trillion this year, accounting for “almost three-quarters of total energy investment growth.”

While the agency welcomed this, it pointed to the huge amount of work ahead.

“The average annual growth rate of investment in clean energy in the five years since the signing of the Paris Agreement in 2015 was just over 2%,” the statement said.

Since 2020, this percentage has risen to 12%. The IEA described this as “much less than is needed to achieve international climate goals, but still an important step in the right direction”.

IEA Executive Director Fatih Birol highlighted the challenges and opportunities facing the planet, given the current situation.

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“We cannot afford to ignore today’s global energy crisis or the climate crisis, but the good news is that we do not have to choose between them – we can deal with both at the same time,” he said.

Birol added that “the huge increase in investment to accelerate the transition to clean energy” is “the only lasting solution”.

“This type of investment is increasing, but we need a much faster increase to ease the pressure on consumers from high fossil fuel prices, to make our energy systems safer and to make the world achieve its climate goals. .

Unevenly distributed costs

Although the investment was welcomed, a statement accompanying the IEA report noted that the increase in clean energy costs was unevenly distributed, with most developing economies and China.

On top of that, some markets say they see high prices and energy security concerns are causing “greater investment in fossil fuel supplies, especially coal”.

According to an IEA report, about $ 105 billion has been invested in what it calls a “coal supply chain” in 2021. This represents an increase of 10% compared to 2020. The industry is projected to follow suit this year.

“Global investment in coal supplies is expected to increase by another 10% in 2022 as limited supplies continue to attract new projects,” the statement said. With more than $ 80 billion, China and India are expected to account for the bulk of global coal investment in 2022.

The US Energy Information Administration lists a number of emissions from coal burning. These include carbon dioxide, sulfur dioxide, particulate matter and nitrogen oxides.

Greenpeace, for its part, described coal as “the dirtiest and most polluting way to produce energy.”

A challenging global environment

The IEA report comes at a time of rising inflation, a sustained jump in oil and gas prices and geopolitical tensions over the Russia-Ukraine war.

These factors have created an extremely challenging environment for businesses, governments and consumers. The energy sector is no different.

“Nearly half of the additional $ 200 billion in capital investment in 2022 is likely to be eaten up by higher costs, instead of bringing in extra capacity for energy supply or savings,” the IEA said.

It adds that the cost of solar panels and wind turbines – technologies that are crucial for the energy transition – has now “increased by between 10% and 20% by 2020.” after a period of decline.

People around the world are also experiencing a pinch: the total energy bill for consumers in 2022 looks set to exceed $ 10 trillion for the first time, the IEA report said.

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