The head of the International Energy Agency says that investment in solar energy will exceed oil for the first time

The head of the International Energy Agency said investment in solar energy is set to exceed spending on oil production this year for the first time, highlighting a boom in clean energy development that should help reduce global emissions if the trend continues.

If clean energy investments continue to grow in line with what we have seen in the past few years. . . Fatih Birol, executive director of the International Energy Agency, told the Financial Times, referring to the Paris agreement’s goal of limiting global temperature rise.

$1.7 trillion is expected to be spent this year on clean technologies compared to $1 trillion on fossil fuels. Five years ago, $2 trillion in annual investment in energy was split evenly between fossil fuels and clean technology, such as renewables, electric vehicles, and low-emission fuels.

“A new global clean energy economy is emerging,” Birol said, adding, “For a guy like me who gets his hands dirty with data every single day, this is an amazing and dramatic shift.”

Vertical chart of annual investment ($ billion) showing that clean energy spending is expected to reach $1.7 trillion in 2023

The increase in clean energy spending is being driven by the strong rebound in economic growth in the wake of the Covid-19 pandemic, as well as concerns about price volatility and energy security stemming from Russia’s all-out invasion of Ukraine last year, according to the International Energy Agency’s annual report. Global Energy Investment Report, published Thursday.

The report said enhanced policy support such as the US Inflation Reduction Act, which provided $369 billion in subsidies and tax credits for clean energy technologies, has also helped.

As a result, the International Energy Agency expects annual investment in clean energy to jump 24 percent compared to 2021, while spending on fossil fuels will rise by 15 percent.

Birol said solar energy was the “star of global energy investments” with total spending expected to exceed $1 billion per day, surpassing spending on oil production.

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The head of the International Energy Agency attended the recent G7 summit in Japan and said he was encouraged by the level of consensus on energy issues among G7 members and invited countries such as Brazil, India and Indonesia. “Rarely have I seen such a homogeneous view of the future of energy markets,” he added.

But Birol said that to maintain the momentum the G7 leaders need to ensure that existing clean energy spending is expanded to more emerging and developing countries. “If there is one challenge, it is whether or not emerging countries will be able to finance the clean energy transition on their own,” he added.

Despite a boom in clean energy spending, global energy-related carbon emissions grew 0.9 percent last year to a record 36.8 billion tons, the International Energy Agency said in March.

Birol also called on national and international oil companies to direct more of their spending towards low-carbon energy solutions. Total investment by the oil and gas industry in low-emissions energy sources is less than 5 percent of total expenditure on fossil fuel production, according to an IEA analysis.

“I hope there will be more similarity between what the heads of international and national oil companies say about their concerns about climate change and what they do in terms of their investments,” Birol said.

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