The IEA’s World Energy Investment report said global energy investment this year is projected to reach $2.4tn (€2.28tn), with the bulk going into renewables and grids.
However, almost half of the increase in capital spending is linked to higher costs due to supply chain pressures instead of bringing additional energy supply capacity or savings.
“We are finally seeing some momentum about investment in energy transitions,” said Tim Gould, chief energy economist at the IEA.
The report found that clean energy investment is expected to exceed $1.4tn in 2022 and accounts for almost three-quarters of the growth in overall energy investment.
Since 2020, the average growth rate of clean energy investment is estimated at 12% per annum compared to just over 2% every year between 2015 and 2020.
The IAE said the faster pace remains “well short” of what is needed to meet international climate goals, but is “nonetheless an important step in the right direction.”
According to the report, nuclear investment is accelerating on the construction of new nuclear power reactors in China, Europe and Pakistan, and the refurbishment, modernisation and life extension of existing reactors in France, the US, and Russia.
Around $100bn per year and over the past four years have been invested in clean dispatchable generation with a steady rise in spending on nuclear outweighing a decline in hydropower.
The report said China has the leading role with 50% of all final investment decisions committed to nuclear and hydropower since 2015.
But the IEA warned the pipeline* for new projects in nuclear and hydro has globally decreased while it should be increasing. The trend was identified despite the fact that 2021 saw a record level of investment decisions for large-scale dispatchable low-carbon generation, both for nuclear and hydropower.
The IEA report also found that uranium for nuclear fuel production is another point for concern in view of the Russian invasion of Ukraine and the ensuing impact on energy security.
Russia accounts for only 6% of global uranium mining, but for over 40% of global enrichment capacity, the IEA said. The war has meant that options should be examined for diversifying enriched uranium supplies, including investment in new facilities and the reopening of existing conversion plants.
Fatih Birol, head of the IEA, told the Financial Times earlier this week that countries should try to push back the closure of any nuclear power plants scheduled for retirement to help limit the amount of gas used in electricity generation, given the gas supply disruption resulting from the conflict in Ukraine.
The IEA’s energy investment report estimated that incomes of the global oil and gas industry could reach a record $4tn in 2022, because of high market prices and despite the fact that the sector has seen investment levels lower than their 2019 levels.
Mr Birol said governments should find ways to “channel” these windfall profits in the clean energy transformation of their economies.
“Only 5% of the entire investment of oil and gas companies goes to clean energy technology,” he said.
The IEA also warned that global geopolitical instability and energy supply concerns have pushed coal investments by 10% in 2022 in what appears to be a trend that will be difficult to reverse in the coming years – “an alarm bell”, said Mr Birol.
*The pipeline is measured as the gigawatt (GW) capacity of final investment decisions minus the GW capacity of projects entering operation, on a cumulative basis (IEA definition).
