War in Ukraine Fuels Green Energy Funding Boom
The International Energy Agency (IEA) released a report on Thursday that ‘clean energy’ investments surged during Russia’s invasion of Ukraine, driven by concern over volatility fossil fuel prices and the cutting off of oil and gas supplies from Russia.
According to the report, investments in clean energy will reach $1.7 trillion this year, while investments in fossil fuels will reach just over $1 trillion.
Invasion of Ukraine ‘fuelled clean energy finance boom’ https://t.co/U32hlLMhQH
— The Guardian (@guardian) May 25, 2023
“In very simple, but very stark terms, five years ago global energy investment was $2 trillion, of which $1 trillion was for clean energy and $1 trillion for fossil fuels. . Today, $1 trillion is for fossil fuels and $1.7 trillion for clean energy,” IEA Executive Director Fatih Birol said in the UK. Guardian.
“For the first time in history, the amount of investment devoted to solar energy is greater than the amount devoted to oil production. It may be symbolic, but it is very important because it shows the tide which is turning,” Birol said.
“This is a radical change that will have consequences for energy markets and climate change. In my opinion, this is very exciting,” Birol said, a perhaps unfortunate choice of words given the titanic scale of human suffering in the Ukrainian conflict.
THE Guardian inadvertently took away some of the “excitement” by noting collapsing fossil fuel demand and prices during the Wuhan coronavirus pandemic. Some oil and gas investments are therefore growing more in volume than the dollar comparison cited by the IEA would suggest, but since fossil fuels have become cheaper, the dollar value of investments is lower.
“At the same time, global demand for coal is at an all-time high in 2022, driven in part by record gas prices, which have boosted estimated coal investment for this year to nearly six times the levels that are aligned with the 2030 global climate goals, “the Guardian carefully emphasized.
Smoldering chimneys and a solar panel farm are seen along a highway in a coal-producing area in Yulin, northwest China’s Shaanxi province, April 24, 2023. (AP Photo/ Ng Han Guan)
The IEA report’s expansive total for planned ‘clean energy’ investments in 2023 includes ‘renewables, electric vehicles, nuclear power, grids, storage, low-emission fuels, retrofits efficiency and heat pumps”, which would seem to skew the analysis against the narrow definition of “coal, gas and oil” investment, especially since many green energy activists would strongly oppose the inclusion of nuclear energy in the “clean” category.
“More than 90% of this increase comes from advanced economies and China, posing a serious risk of new dividing lines in global energy if clean energy transitions do not accelerate elsewhere,” warned the Board. OUCH.
This is more than a trivial concern, as developing economies struggle to afford expensive green energy solutions that do not provide enough affordable, consistent power for their growing industrial needs.
The IEA itself has previously noted that carbon dioxide emissions from developing economies are increasing rapidly and that these countries account for only a small fraction of total global expenditure on green energy.
Ukrainian soldiers fire cannons near Bakhmut, an eastern town where fierce fighting against Russian forces is taking place, in Donetsk region, Ukraine, May 15, 2023. (AP Photo/Libkos)
After its opening paragraphs praised the world for spending more on clean energy solutions, the IEA’s 2023 report acknowledged that developing countries still fall short of its aspirations:
The largest clean energy investment gaps are in emerging and developing economies. There are bright spots, such as aggressive investments in solar in India and renewables in Brazil and parts of the Middle East. However, investment in many countries is being held back by factors such as higher interest rates, unclear policy frameworks and market designs, weak grid infrastructure, financially challenged utilities, and cost high capital. The international community must do much more, especially to stimulate investment in low-income economies, where the private sector is reluctant to venture.
A tanker is moored at the Sheskharis complex, part of Chernomortransneft JSC, a subsidiary of Transneft PJSC, in Novorossiysk, Russia October 11, 2022, one of the largest oil and petroleum products facilities in southern Russia . (AP Photo)
Indeed, the considerably less optimistic closing paragraphs of the IEA report indicate that the developing world is still not spending enough to meet the ambitious targets the organization has set for 2030 and 2050, and the benefit much-vaunted spending on clean energy. seems temporary:
Nevertheless, the expected rebound in fossil fuel investment means that it is expected to increase in 2023 to more than double the levels needed in 2030 in the IEA’s net zero emissions by 2050 scenario. Global coal demand hit a record high in 2022, and coal investment this year is expected to reach almost six times the levels projected in 2030 under the net zero scenario.
The oil and gas industry’s capital expenditure on low-emission alternatives such as clean electricity, clean fuels and carbon capture technologies accounted for less than 5% of its upstream expenditure in 2022. This level has little changed from last year – although the share is higher for some of Europe’s largest companies.
Bloomberg Law reported in April that much of the “explosion” in clean energy spending in the United States over the past eight months was not driven by sustained market demand, but by a “surge of federal incentives” – and that the money came from a government that is currently on the brink of an apocalyptic debt crisis.
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