However, investments in fossil fuels are also increasing noticeably after the slump in the corona crisis in 2020 and have almost reached the level of 2019 at a good 1 trillion dollars. Mineral oil companies earned very well, used this for lavish dividends, but hardly for renewables.
The IEA is pleased that investment in a clean energy system should increase by a quarter between 2021 and 2023. “For every dollar that goes into fossil fuels, $1.7 is spent on clean energy,” said IEA director Fatih Birol. However, the IEA defines investments in “clean energy” very broadly. She not only counts nuclear power, but also grid expansion, battery storage, CO2 storage, energy saving measures and the price difference between electric cars and petrol engines. According to this, around 650 billion euros will be invested this year purely in the generation of renewable energy, which is significantly less than in fossil fuels.
The fossil energy industry is also booming
In the shadow of all the successes in the expansion of renewable energy, the fossil energy industry is also booming: The upturn means that twice as much is being invested in this area this year as would be necessary according to the IEA path towards zero emissions in 2030. This is especially true for coal, where demand is at an all-time high in 2022 and investment is likely six times what it should be on the path to zero emissions. In the coal industry alone, 10 percent more is being invested this year than in the previous year. In 2022, new 40 GW coal-fired power plants were approved, almost all in China.
According to the IEA analysis, the mineral oil companies are hardly contributing to the restructuring of the energy system. Globally, they invest 20 times more in oil and gas than in renewables, with Europe’s firms standing out positively with a much higher proportion of their spend on renewables. Investments by the industry in clean energy sources are picking up speed, but are far below the level required in the fight against climate change.
$4 trillion profit
The year 2022 was “extraordinarily profitable” for many oil and gas companies, according to the IEA in its “World Energy Investment 2023” report. Earnings more than doubled the prior-year average at $4 trillion, more than half of which was spent on dividends, stock buybacks and debt service, while three-quarters were previously reinvested.
The IEA also points out that the expansion of clean energy is an issue in industrialized countries and China. 90 percent of the new investments are made here, as well as 80 percent of the network expansion. The grids in developing countries are already too weak to switch to less stable renewable energy sources. This threatens an even greater gap in the energy supply between developing and industrialized countries.
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