Global investment in clean tech and energy transition reached a record $1.8 trillion in 2023

Energize Weekly, February 7, 2024

Global investments in the energy transition from fossil fuels to clean tech climbed 17 percent in 2023 to a record $1.8 trillion, according to a study by the energy research group BloombergNEF.

The largest investments were in electrified transport, which overtook renewable energy as the main target of financing. China was the biggest market with more than a third of the total investment followed by the Europe and the U.S.

As well as looking at investments in electric vehicles and other electrified transport, and renewable power, including solar and wind, the report charted spending in emerging clean technologies such as hydrogen. It also tallied investments in power grid innovations.

BloombergNEF tracked investments in the clean energy supply chain, venture capital, private equity and public market investment in climate-tech companies, and debt issuance by companies for energy transition purposes.

Funding flows across the four investment categories (energy transition, clean energy supply chain investment, climate-tech equity raising, and energy-tech debt issuance) reached a total of $2.8 trillion in funds.

Approximately $1.9 trillion was spent in deploying clean tech, plus setting up mines, factories, and refineries to produce or support clean tech, BloombergNEF said.

Another $900 billion was raised by companies or governments active in climate tech or the energy transition.

Debt issuance for energy transition purposes, mainly by utilities, financial institutions, and governments, rose 4 percent to $824 billion compared with 2022.

Investment in energy transition has outpaced fossil fuel investments for the last five years – $5.4 trillion to $3.7 trillion. In 2023, clean energy financing was $1.8 trillion compared to $1.1 trillion for fossil fuels.

Electrified transport accounted for $634 billion, up 36 percent year-on-year, while renewable energy had just an 8 percent bump to $623 billion in 2023.

“There was also strong growth in emerging areas,” BloombergNEF said, with investments in hydrogen tripling year-on-year to $10.4 billion, carbon capture and storage nearly doubling to $11.1 billion and energy storage up 76 percent to $36 billion.

Investments in nuclear, $33 billion, electrified heat, $63 billion, and clean shipping, $385 million, were all down slightly.

China was the main source of energy transition investment, with 38 percent of the global total at $676 billion. U.S. funding grew to $303 billion, and the 27 member nations of the European Union invested $340 billion in clean tech.

In the U.S., federal policies are driving investment at a quicker pace than in China. “The effects of the Inflation Reduction Act are starting to be felt, and the gap to China has narrowed,” BloombergNEF said.

For growth to be sustained more investment needs to be made in the global energy supply chain, including equipment factories, battery metals production, refineries and mines, the report said.

Supply chain investments hit a record $135 billion in 2023 and are set to surge over the next two years. “Investment plans show a 66 percent increase from 2023 to 2024, driven by a bulging pipeline of battery gigafactories,” the analysis said.

“It is a good thing that a large pipeline of lithium-ion factories has already been announced: achieving net zero will require a big expansion in battery manufacturing,” BloombergNEF said. “Battery plants make up roughly 70 percent of the spending required over 2024-2030.”