The $2.4 trillion set to be invested in energy this year includes record spending on renewables but falls short of plugging a supply gap and tackling climate change, the International Energy Agency (IEA) said on Wednesday.
Rising 8% from the previous year when the pandemic was more severe, the investment includes big increases in the power sector and efforts to bolster energy efficiency, the Paris-based watchdog said in its annual report on investment.
“A massive surge in investment to accelerate clean energy transitions is the only lasting solution,” said IEA Executive Director Fatih Birol.
“This kind of investment is rising, but we need a much faster increase to ease the pressure on consumers from high fossil fuel prices, make our energy systems more secure, and get the world on track to reach our climate goals.”
The advances are focused in the developed world, however, with poorer countries excluding China still investing no more in renewables than in 2015, when leaders inked the Paris Agreement to cap the rise in temperatures to as close as possible to 1.5 degrees Celsius above pre-industrial times.
Investment in coal – one of the most polluting fossil fuels – was up by 10% last year, the IEA warned, with China continuing to bring new coal-fired powered plants online.
Still, clean energy investment worldwide has risen 12% since 2020 after an increase of just 2% annually in the previous five years.
Investment in other fossil fuels falls short of climate goals, the IEA said, and still cannot meet rising demand if energy systems are not retooled towards cleaner technology.
“Today’s oil and gas spending is caught between two visions of the future: it is too high for a pathway aligned with limiting global warming to 1.5 °C but not enough to satisfy rising demand in a scenario where governments stick with today’s policy settings and fail to deliver on their climate pledges,” it said.