Investments in the energy transition hit $1.1 trillion — with a T — last year • TechCrunch

Here is the hockey stick.

After years of trial and error, investments in the energy transition seem to be taking off. Businesses, financial institutions, governments and end users around the world have invested $1.11 trillion in low-carbon technologies, according to a new report from BloombergNEF. This was just over 30% more than in 2021 and the second consecutive year in which the growth rate exceeded this figure.

Perhaps more remarkable is the fact that for the first time ever, the money invested in the energy transition has doubled the funds spent on fossil fuel investments. If you count the $274 billion spent on improving the electricity grid, investments in the energy transition have far exceeded fossil fuels, reaching $1.38 trillion.

Over the past two decades, most low-carbon investments have been targeted towards renewable energy, including wind, solar and biofuels. They hit another all-time high last year with $495 billion invested, up 17% from 2021. But in recent years, money has also flowed into more diverse sectors, including storage. energy, space heating, sustainable materials and electrified transport.

Last year was no exception. Investments in electrified transportation — think electric vehicles and charging networks — grew 54% in 2022 to $466 billion. Hydrogen, which is often uttered in the same breath as battery electric vehicles, contributed $1.1 billion to the trillion total. Although this figure may seem low, it is triple the amount received by the sector in 2021. Overall, investments have been balanced between supply (energy production and storage) and demand (users energy such as transport, heat and sustainable materials).

Most of the money comes from China. The country accounted for about half of the total, $546 billion. The United States was second with $141 billion and Germany was third with $55 billion. If the whole of the EU were grouped together, the bloc would have taken second place with $180 billion.

In particular, China dominates in areas such as manufacturing capacity and supply chain development. Last year, it spent heavily on electrified transport and renewable energy like solar and wind power. Given this combination, it’s possible we’ll see Chinese solar panels flooding the market again, although this time they’re accompanied by cheap batteries. Inexpensive solar power combined with cheap batteries is what will be needed to remove significant amounts of fossil fuel from the grid.

If there was a weak spot, it was global equities and private investment in climate technology. Those numbers fell 29% to $119 billion. This shouldn’t be a surprise; 2021 has been a crazy year for venture capital and private equity.