Global Low-Carbon Energy Transition Investment Hits Record USD 1.77 Trillion in 2023
A notable finding of the report is the dominance of electrified transport as the largest sector for spending in the energy transition.
February 02, 2024. By Abha Rustagi
A notable finding of the report is the dominance of electrified transport as the largest sector for spending in the energy transition. Growing by an impressive 36 percent in 2023, the sector attracted USD 634 billion in investment. This figure encompasses spending on electric cars, buses, two- and three-wheelers, as well as associated infrastructure.
Electrified transport surpassed the renewable energy sector, which still experienced an 8 percent increase, reaching USD 623 billion. The renewable energy sector's investment covered the construction of facilities such as wind, solar, and geothermal power plants, as well as biofuels production plants. Power grid investment, crucial for enabling the energy transition, ranked as the third-largest contributor at USD 310 billion.
Meredith Annex, BNEF’s Head of Clean Power and co-author of the report highlighted, "Last year brought new records for global renewable energy investment. Strong growth in the US and Europe drove the global rise, even as China, the world’s largest renewables market, sputtered, recording an 11 percent drop. Despite a year of tough headlines, a record amount of offshore wind capacity also reached financial close."
China remained the largest contributor, investing a substantial USD 676 billion in 2023, equivalent to 38 percent of the global total. However, the combined investments of the European Union, US, and UK surpassed China with a total of USD 718 billion, a feat not achieved in 2022. The US, in particular, experienced a 22 percent year-on-year investment jump to USD 303 billion, attributed to the effects of the Inflation Reduction Act.
Despite these remarkable figures, the report emphasizes that the current level of investment in clean energy technologies falls short of the necessary trajectory for achieving net zero by mid-century. According to BNEF's Net Zero Scenario, aligned with the Paris Agreement, energy transition investment would need to average USD 4.8 trillion per year from 2024 to 2030—nearly three times the total investment observed in 2023.
Albert Cheung, Deputy CEO of BNEF, urged determined action from policymakers, stating, "Our report shows just how quickly the clean energy opportunity is growing, and yet how far off track we still are. Energy transition investment spending grew 17 percent last year, but it needs to grow more than 170 percent if we are to get on track for net zero in the coming years."
Additionally, the report highlighted the surge in investment in the global clean energy supply chain, including equipment factories and battery metals production. In 2023, this category hit a new record of USD 135 billion, up from USD 46 billion in 2020, with projections indicating a rise to USD 259 billion by 2025 based on current investment plans. However, oversupply may lead to squeezed margins for solar and battery manufacturers, according to Antoine Vagneur-Jones, Head of Trade and Supply Chains at BNEF.
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