Decarbonisation requires big shift from fossil to low-carbon energy investment

For the world to achieve meaningful decarbonisation by 2050, a significant shift in energy investment patterns will be needed over the next decades, according to an analysis by BloombergNEF (BNEF).

While in 2022 the low-carbon to fossil energy supply investment ratio stands at 0.9:1, it should change to 4:1 on average over the decade from 2021 to 2030. This means that for every dollar spent on fossil fuel energy supply, four would need to be invested in low-carbon energy supply.

BNEF explored several long-term scenarios from organisations including the International Energy Agency (IEA) and Intergovernmental Panel on Climate Change (IPCC) that are consistent with global temperature rises within 1.5 degrees C.

According to its analysis, total energy supply investment into all technologies ranges from USD 40.2 trillion (EUR 40.5trn) to USD 114.4 trillion across 2021-2050, with the significant variation reflecting differing scenario narratives and socio-economic drivers. Investment in fossil fuel energy supply varies from USD 5.3 trillion to USD 18.2 trillion.

This suggests that beyond 2030, the ratio of low-carbon to fossil fuel energy supply investment is increasing to about 6:1 for the decade to 2040 and around 10:1 for the following decade.

The total projected energy supply investment in 2021-2050 is equivalent to USD 1.3 trillion to USD 3.8 trillion per year. In 2020-2022, total energy supply investment averaged USD 1.6 trillion per year, of which USD 766 billion went to low-carbon energy supply. The 2022 low-carbon energy supply investment is estimated at USD 815 billion, up from USD 718 billion in 2020.

(USD 1 = EUR 1.009)

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