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Spending on clean energy is expected to be double that of fossil fuels, the IAEA reports

According to the International Energy Agency, investments in clean energy technologies will reach $2 trillion this year, almost double the amount spent on fossil fuels.

Two-thirds of the record $3 trillion invested in energy resources by 2024 will be spent on sectors such as renewables, electric vehicles, nuclear power, networks, storage and efficiency, even as higher financing costs hamper projects, the Paris-based agency said . The remaining $1 trillion will go to coal, gas and oil – a level that is still too high to meet global climate goals.

“We have reached an important milestone,” IEA Director Fatih Birol said in an interview as the agency published its annual World Energy Investment report. “Investments in clean energy are setting new records, even in challenging economic conditions.”

Combined investments in renewable energy and electricity grids have overtaken the amount spent on fossil fuels for the first time. Some green projects have been hampered by rising interest rates, but this has been offset by “relieving pressure on the supply chain and falling prices”, the IEA said in its report.

Growth is “supported by a strong economy, by continued cost reductions and by energy security considerations,” which are reinforced by Russia’s invasion of Ukraine, it added.

Solar energy is leading the transformation of the energy sector, with investment in the area expected to reach $500 billion this year – more than the money flowing into all other electricity generation technologies combined.

According to the report, total investments in renewables and nuclear energy for electricity generation are ten times the amount invested in fossil fuel generation. When the Paris climate agreement was concluded in 2015, that ratio was two to one.

“We see renewed momentum in nuclear energy investments,” Birol added.

According to the report, China will account for the largest share of clean energy investments, with about $675 billion this year, due to strong domestic demand for solar energy, lithium batteries and electric vehicles. Yet clean energy investment in other emerging and developing economies remains low, at around $320 billion, accounting for just 15% of the global total, the report said.

Nevertheless, demand for fossil fuels continues to grow at a pace that puts the world on track for potentially catastrophic climate change.

According to the report, investment in new oil and gas supplies will increase by 7% to $570 billion this year, mainly concentrated in national oil companies in the Middle East and Asia.

To reach the goal of net-zero carbon emissions by 2025 – and limit global temperature rise to 1.5 degrees Celsius above pre-industrial levels – spending on fossil fuels would need to be halved, while an additional $500 billion annually should be spent on renewable energy sources.

“Looking at these trends is certainly encouraging, but they fall short,” Birol warned. “We are nowhere near the 1.5 degree range.”

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