Low-carbon energy transition investment hits $755bn in 2021

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Global investment in the energy transition from carbon reached a record $755 billion in 2021, according to research by BloombergNEF.

It’s annual Energy Transition Investment Trends 2022 report found increased investment in renewable energy, energy storage, electrified transport, electrified heat, nuclear, hydrogen and sustainable materials. 

Renewable energy remains the largest sector in investment terms achieving a new record of $366 billion committed in 2021, up 6.5% from the year prior. Electrified transport was the second-largest sector with $273 billion invested representing an annual increase of 77%. 

The overall increase of 27% in investments suggests that investors, governments, and businesses are more committed to the low-carbon transition, with China the largest single country for energy transition investment, committing $266 billion in 2021. The US was in second place with $114 billion. While Germany, the UK and France rounded out the top five countries for energy transition investment in 2021, Asia-Pacific countries now hold four of the top 10 places in terms of energy transition investment levels - India and South Korea joining China and Japan. 

Despite these levels of investment, however, for the world to reach global net zero by 2050, in line with 1.75 degrees of global warming, the report suggests that investment levels will need to roughly triple to $2.1 trillion per annum between 2022-2025. They will then need to double again to an average of $4.2 trillion between 2026 and 2030.  

That will be a tough ask and among the sectors looked at, it appears that only the electrified transport sector has the best chance of hitting that level of investment.