A new, broad measure of ‘energy transition investment’, compiled by BloombergNEF (BNEF), shows that the world committed a record US$501.3 billion to decarbonisation in 2020, beating the previous year by nine per cent despite the economic disruption caused by the COVID-19 pandemic.
BNEF’s analysis shows that companies, governments and households invested US$303.5 billion in new renewable energy capacity in 2020, up two per cent on the year, helped by the biggest-ever build-out of solar projects and a US$50 billion surge for offshore wind.
They also spent US$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.
Domestic installation of energy-efficient heat pumps came to US$50.8 billion, up 12 per cent, while investment in stationary energy storage technologies such as batteries was US$3.6 billion, level with 2019 despite falling unit prices.
Global investment in carbon capture and storage (CCS) tripled to US$3 billion, and that in hydrogen was US$1.5 billion, down 20 per cent but the second-highest annual number to date (see Figure 1).
Albert Cheung, head of analysis at BNEF, said: “Our figures show that the world has reached half a trillion dollars a year in its investment to decarbonise 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 US$166.2 billion (up 67 per cent), with China at US$134.8 billion (down 12 per cent) and the United States at US$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.”
A pack of charts illustrating the trends in energy transition investment discussed above is available via the following link.
The pack also includes slides showing a number of ‘thematic highlights’ of 2020 including low-carbon investment by oil and gas companies, US$12.7 billion in 2020, the 10-fold growth of clean energy exchange-traded funds in just one year, and the seemingly inexorable rise of sustainable debt.
BNEF’s “10 Predictions for 2021”, are also published today, and can be read via this link.
Overall, solar capacity investment was up 12 per cent at US$148.6 billion, and wind (onshore and offshore) down six per cent at US$142.7 billion.
Biomass and waste-to-energy financings were down three per cent at US$10 billion.
BloombergNEF also continues to track investment by the public markets and venture capital and private equity players in renewable energy and the closely related area of energy storage.
In 2020, specialist companies in these areas raised a runaway record figure of US$20 billion via share issues on public markets, up 249 per cent on the previous year.
The biggest deals included US$2.8 billion raised by Chinese battery maker Contemporary Amperex Technology, or CATL, US$846 million from US fuel cell company Plug Power, and US$777 million from Chinese PV manufacturer JA Solar Technology.
Venture capital and private equity investment in renewables and storage increased 51 per cent to US$5.9 billion last year.
Both this, and investment via the public markets, took place against the backdrop of buoyant share prices: the WilderHill New Energy Global Innovation Index, or NEX, which tracks about 100 clean energy stocks worldwide, rose 142 per cent in 2020 to record levels.
This positive investor mood helped electric vehicle companies raised some US$28 billion from stock market investors in 2020, up from just US$1.6 billion in 2019, according to BNEF estimates.
Last year’s total was seven times the previous record, in 2016.
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