The net zero transition continues to accelerate, with Bloomberg New Energy Finance reporting record figures in 2022. A 31% increase took global investment in net zero to USD $1.1 trillion, up from $849 billion in 2021.
As you can see below, renewable energy still makes up the most significant chunk of that investment, but electrified transport is getting closer each year.
The reason might seem to be found in the public commitments to net zero in Western countries in the years following Greta Thunberg, along with East Asian allies Japan and Korea getting on board. Yet it is in China where the real action is taking place.
Of that $1.1 trillion invested in net zero 2022, a stunning $546 billion was invested in China. That is far beyond the EU, with $180 billion, despite their 40% leap in solar installation in the wake of the invasion of Ukraine. It’s also well beyond the $140 billion invested in the US.
In clean energy manufacturing, the comparison gets even more ridiculous. Of global investment in these facilities, the ones making components for solar, wind, batteries and hydrogen electrolysers, 90% took place in China.
Bloomberg New Energy Finance estimates the total world investment in net zero to 2050 will reach USD $174 trillion. There is tremendous economic competition set to occur, but so far it is no contest.
That may be soon to change in the wake of the heralded Inflation Reduction Act driven by the Biden White House. The law creates tremendous tax credits for clean energy and green hydrogen in particular, but these are matched by significant provisions favouring US suppliers. Japan has recently lobbied for its manufacturers to be included in the Act’s approved supply chains, and that’s the kind of geopolitical favour only given for something in return…
The mass investments so long required to move beyond a carbon intensive economy may be finally arriving. But alongside it, we are seeing increasing protectionism and state-led economic interventions that will likely lead to greater international tensions as a result.
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