Solar energy is on track to attract more investment than oil production globally this year for the first time ever according to World Energy Investment 2023 report published by International Energy Agency’s (IEA).

According to the report, global energy investment is set to reach $2.8 trillion in 2023, compared to around $2.6 trillion last year. The increase is driven by growth in clean energy, which includes renewable energy, nuclear, storage and low-emission fuels. Clean energy investment is expected to reach more than $1.7 trillion this year. This is a 50% increase over the past five years and an 8% increase year on year and now exceeds fossil fuel investment by approximately 70%.

Renewable energy has attracted the greatest increase of more than $650 billion in capital in 2023, up 11% year-over-year, and 75% over the past five years with electric vehicle (EV) growth as another significant contributor to the increase, up by more than 800% since 2018 to nearly $130 billion this year.

Solar PV has been the key growth area in the renewables sector. It has attracted approximately $380 billion in capital this year and now exceeds, for the first time ever, investment in oil production.

The growth is concentrated mostly in China and advanced economies like the EU and U.S, with a combined growth of over 90% in investment.

Periods of strong economic growth and volatility in fossil fuel prices following Russia’s invasion of Ukraine, have been significant factors in the increase in clean energy investments. Clean energy investment has also benefitted from policy support through major governmental actions like the US Inflation Reduction Act and government initiatives in Europe, Japan and China.

However, while clean energy investment is outpacing fossil fuels, investment in the latter is also increasing steadily since its decline in 2020 and is expected to reach its pre-COVID level in the near future.

Dr Jacqueline Faridani

Dr Jacqueline Faridani heads up Prospect Law’s fast growing ESG practice. She is an advisor in financial risk management with 20 years of experience in a variety of risk management, compliance and product control roles at Canadian, German, French and Russian banks and life insurance companies, as well as for the Canadian financial regulator (OSFI).

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

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