Global spending on energy transition peaks at USD 501.3bn in 2020

Global energy transition investment in 2020 reached the record USD 501.3 billion (EUR 414.3bn) as more nations and businesses are committing to net-zero and spending on renewable energy and electric vehicles (EVs) soars, BloombergNEF (BNEF) said.

In spite of the COVID-19 fallout, spending on energy transition increased by 9% in annual terms, according to BNEF’s latest market analysis. Investment in renewable energy alone came at USD 303.5 billion, up 2% on the year, while the all-time-high USD 139 billion were spent on electric cars and related charging infrastructure. The energy storage industry accounted for USD 3.6 billion and USD 1.5 billion were channeled into the hydrogen sector, where investments marked a 20% year-on-year drop.

In geographical terms, Europe was the leader with USD 166.2 billion spent on energy transition, up 67%, followed by China with USD 134.8 billion, down 12%, and the US with USD 85.3 billion, down 11%.

Falling capital costs were the major growth driver for renewables investment over the world and the addition of 132 GW of solar and 73 GW of wind power capacity. Offshore wind witnessed a USD-50-billion surge in investments, equal to a 56% year-on-year jump, whereas the biggest-ever build-out of solar projects pushed solar capacity investment up by 12% to USD 148.6 billion. Biomass and waste-to-energy financings contracted by 3% at USD 10 billion.

The main actors on the renewables scene were China and Europe, where USD 83.6 billion and USD 81.8 billion, respectively, were invested in renewables. The top five list also included the US with financings totalling USD 49.3 billion and Japan with USD 19.3 billion of investments.

Public markets investment in specialist clean energy companies skyrocketed to the record USD 20 billion and spending by venture capital (VC) and private equity (PE) investors grew by 51% to USD 5.9 billion. The most prominent transactions were undertaken by Chinese battery maker Contemporary Amperex Technology, US fuel cell company Plug Power, Chinese solar products maker JA Solar Technology.

EV companies raised some USD 28 billion from stock market investors in 2020, against USD 1.6 billion in 2019.

BNEF’s head of analysis Albert Cheung noted that clean power generation and electric transport are seeing heavy inflows, but much more is needed to help bring emissions under control. “We need to be talking about trillions per year if we are to meet climate goals,” he said.

On a more positive note, BNEF’s CEO Jon Moore commented that 54% of 2016 emissions are now under some form of net-zero commitment, up from 34% at the start of 2020, meaning that a further increase in investment is expected in the coming years.

(USD 1.0 = EUR 1.210)

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