Global Shift in Clean Energy Investment as China Surpasses Europe

The war in Ukraine had far-reaching implications that reverberated across the globe, particularly in the energy sector. The disruption in the energy markets resulted in a global energy crisis that shifted the focus away from renewable sources of energy to traditional fossil fuels. The tight oil and gas markets in the first half of 2022 led to record prices, causing many countries to abandon their carbon reduction commitments and instead resort to using “dirty” fuels such as coal and nuclear energy.

Despite the setback, investment in clean energy remained strong, with $1.1 trillion invested in the sector in 2022, according to data from Bloomberg New Energy Finance (BNEF). Renewables received the largest share of investments, with $495 billion invested, followed by electrified transport, which received $466 billion. The fastest-growing sector was hydrogen, which saw its investment triple in 2022.

In terms of geographical distribution, China overtook Europe as the leading destination for clean energy investment, with $546 billion invested compared to Europe’s $180 billion and the US’ $141 billion. Renewable energy has become increasingly cost-competitive with fossil fuels, with solar photovoltaic and onshore wind being the cheapest sources of energy generation.

However, the energy crisis also had unintended consequences, as many countries have restarted their coal plants and are reconsidering their nuclear energy policies. The increased demand for coal has led to a boost in its usage and prices, putting a damper on the progress made in transitioning to clean energy sources.