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Worldwide investment in energy transition hits all-time high
BloombergNEF study: 755 billion US dollars invested in renewables, electrified transport and heat pumps

As reported earlier by en:former, 2021 was a record year in the global expansion of renewable energy. Nearly 290 gigawatts in capacity from solar PV systems, wind farms and other green electricity generation assets went online. This build-out contributed to breaking a further record last year. A recent study by energy research firm BloombergNEF has a hitherto unmatched amount of capital being spent on the world’s energy transition in 2021. A whopping 755 billion US dollars (equivalent to 666 billion euros) was committed to low-carbon technologies around the globe. Investment is being fuelled by climate ambitions in many countries the world over.

In the annual report entitled Energy Transition Investment Trends (an abridged version of which is available here) analysts reviewed capital expenditure on climate-friendly technologies across a variety of sectors. The study uncovered the following major trends.

Steady rise in energy transition investments

Capital expenditure on the global energy transition has risen steadily over the last eight years, growing from 211 billion US dollars in 2013 to 755 billion last year. The jump was especially pronounced in 2021, at 27 percent. Analysts find this all the more remarkable given the rise in the price of key technologies such as solar modules and wind turbines owing to strong demand for raw materials throughout the world. According to the study, this shows  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.”

Global investment in energy transition from 2004 to 2021

Investment  in renewables highest, electrified transport posts strong growth

The renewable energy sector easily attracted the biggest share of capital, amounting to 366 billion US dollars and representing a 6.5 percent rise relative to 2020. Second spot is occupied by electrified transport, i.e. the manufacture of cars, busses, lorries and trains with electric drives along with necessary infrastructure. These areas recorded an impressive gain of 77 percent to 273 billion US dollars, leapfrogging renewable spend in 2022.

Global investment in energy transition by sector 2021

Among other magnets of investment in low-carbon technologies cited by the study are the manufacture of electrified heating systems (53 billion US dollars) such as heat pumps, nuclear power stations (31 billion US dollars) and energy storage. Clean energy as well as electrified transport and heat are thus driving the worldwide energy transition.

Investment by region: Asia leads Europe and the Americas

According to the report, capital expenditure has advanced in all regions around the globe. The largest sum was invested in Asia, followed by Europe ahead of North and South America. The reason becomes apparent when looking at investment in the top 10 nations. The list includes four Asian countries: the Peoples’ Republic of China (with the biggest commitment of 266 billion US dollars), Japan, India and South Korea; four European nations: Germany, the UK, France and Spain; and two countries on the American continent: the USA and Brazil.

Photo credit: © RWE AG

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