Investment in clean energy technologies is significantly outpacing spending on fossil fuels as affordability and security concerns triggered by the global energy crisis strengthen the momentum behind more sustainable options, according to a new IEA report.

About $2.8tr is set to be invested globally in energy in 2023, of which more than $1.7tr is expected to go to clean technologies including renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements and heat pumps, according to the IEA’s latest World Energy Investment report. The remainder, slightly more than $1tr, is going to coal, gas and oil.

Annual clean energy investment is expected to rise by 24 per cent between 2021 and 2023, driven by renewables and electric vehicles, compared with a 15 per cent rise in fossil fuel investment over the same period. But more than 90 per cent of this increase comes from advanced economies and China, presenting a serious risk of new dividing lines in global energy if clean energy transitions don’t pick up elsewhere.

The biggest shortfalls in clean energy investment are in emerging and developing economies. In many countries factors including higher interest rates, unclear policy frameworks and market designs, weak grid infrastructure, financially strained utilities, and a high cost of capital are holding progress back.

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