Energy Transition Investment Hit $501.3 Bn in 2020 – for First Time: BNEF

The world has committed a record USD 501.3 billion to decarbonization in 2020, beating the previous year by 9 per cent despite the economic disruption caused by the Covid-19 pandemic, said BloombergNEF (BNEF) in its ‘energy transition investment’ report.

January 21, 2021. By Manu Tayal

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The world has committed a record USD 501.3 billion to decarbonization in 2020, beating the previous year by 9 per cent despite the economic disruption caused by the Covid-19 pandemic, said BloombergNEF (BNEF) in its ‘energy transition investment’ report.

As per BNEF analysis, companies, governments and households invested USD 303.5 billion in new renewable energy capacity in 2020, up 2 per cent on the year, helped by the biggest-ever build-out of solar projects and a USD 50 billion surge for offshore wind. They also spent USD 139 billion on electric vehicles and associated charging infrastructure, up 28 per cent and a new record.

Other areas of energy transition investment also showed strength, it added.

Domestic installation of energy-efficient heat pumps came to USD 50.8 billion, up 12 per cent, while investment in stationary energy storage technologies such as batteries was USD 3.6 billion excluding pumped hydro systems, level with 2019 despite falling unit prices.

The report further stated that, global investment in carbon capture and storage (CCS) tripled to USD 3 billion, and that in hydrogen was USD 1.5 billion, down 20 per cent but the second-highest annual number to date.

Commenting on the analysis, Albert Cheung, head of analysis at BNEF, said that “our figures show that the world has reached half a trillion dollars a year in its investment to decarbonize the energy system. Clean power generation and electric transport are seeing heavy inflows, but need to see further increases in spending as costs fall. Technologies such as electric heat, CCS and hydrogen are only attracting a fraction of the investment they will need in the 2020s to help bring emissions under control. We need to be talking about trillions per year if we are to meet climate goals.”

A geographical split of BNEF’s energy transition investment data shows that Europe accounted for the biggest slice of global investment, at USD 166.2 billion (up 67 per cent), with China at USD 134.8 billion (down 12 per cent) and the US at USD 85.3 billion (down 11 per cent). Europe’s impressive performance was driven by a record year for electric vehicle sales, and the best year in renewable energy investment since 2012.

Jon Moore, chief executive of BNEF, said: “The coronavirus pandemic has held back progress on some projects, but overall investment in wind and solar has been robust and electric vehicle sales jumped more than expected. Policy ambition is clearly rising as more countries and businesses commit to net-zero targets, and green stimulus programs are starting to make their presence felt. Some 54 per cent of 2016 emissions are now under some form of net-zero commitment, up from 34 per cent at the start of last year. This should drive increasing investment in the coming years.”

Global investment in renewable energy capacity excluding large hydro-electric projects of more than 50MW moved up 2 per cent to USD 303.5 billion in 2020. This was the 2nd-highest annual figure ever (after 2017’s USD 313.3 billion), and the 7th consecutive total of over USD 250 billion. Falling capital costs enabled record volumes of both solar (132GW) and wind (73GW) to be installed on the basis of the modest increase in dollar investment.

Highlights of the renewables investment total included a leap of 56 per cent in financings of offshore wind projects to USD 50 billion, including the largest deal ever in that sub-sector – USD 8.3 billion for the 2.5GW Dogger Bank project in the UK North Sea. The year also saw the largest single solar park ever funded, the 2GW Al Dhafrah in the United Arab Emirates, at a cost of USD 1.1 billion.

Overall, solar capacity investment was up 12 per cent at USD 148.6 billion, and wind (onshore and offshore) down 6 per cent at USD 142.7 billion. Biomass and waste-to-energy financings were down 3 per cent at USD 10 billion.

In terms of regions, renewable energy capacity investment in Europe, at USD 81.8 billion, up 52 per cent, was its highest since 2012 and almost caught up with China, at USD 83.6 billion, down 12 per cent. The US fell 20 per cent to USD 49.3 billion, as wind investment almost halved, and India slipped 36 per cent to USD 6.2 billion.

Renewables capacity investment rose 10 per cent in Japan to USD 19.3 billion, 177 per cent in the UK to USD 16.2 billion and 221 per cent in the Netherlands to USD 14.3 billion. Spain was up 16 per cent at USD 10 billion, Brazil up 23 per cent at USD 8.7 billion, Vietnam 89 per cent higher at USD 7.4 billion, France 38 per cent up at USD 7.3 billion, and Germany 14 per cent up at USD 7.1 billion. Other markets seeing USD 3 billion-plus totals included Taiwan, Australia, South Korea, Poland, Chile, Turkey and Sweden.

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