Global annual investment in low carbon technologies surpassed $US500 billion ($A650 billion) for the first time in 2020, overcoming a year complicated by the Covid-19 pandemic, according to analysts BloombergNEF.
In its latest annual clean energy investment report, BloombergNEF estimates that $US501.3 billion was invested in technologies dedicated to decarbonisation last year, beating 2019 by 9 per cent, as electric vehicles and wind and solar power each attached record levels of investment.
Of this amount, BloombergNEF said more than $US300 million was invested in new renewable energy capacity, 2 per cent more than the previous year, while investment in electric vehicles and associated infrastructure grew by a massive 28 per cent, setting a new annual record with $US139 billion of investment.
“Our figures show that the world has reached half a trillion dollars a year in its investment to decarbonise the energy system,” head of analysis at BNEF, Albert Cheung said.
“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 wide range of zero emissions technologies experienced strong investment growth last year, including the market for domestic heat pumps, which grew 12 per cent to US$50.8 billion globally.
Investment in battery storage was stable at US$3.6 billion, but resulted in a higher capacity of new projects as technology prices continue to fall.
The strong investment growth was driven primarily by Europe, which sought to invest heavily in new green infrastructure in the wake of the Covid-19 pandemic, with investment growing 67 per cent to $US166 billion.
The surge in European investment saw it establish itself as the largest market for clean energy investment, with record years for both electric vehicle sales and its largest investment year for renewable energy projects since 2012.
Europe outpaced investment in China, which came in a $US134.8 billion, falling 12 per cent from 2019 levels, as well as the United States, which saw investment fall 11 per cent to $US85.3 billion.
2020 saw records set for the largest solar and wind projects – with US$8.3 billion committed to the Dogger bank offshore wind project, the largest single investment in an offshore wind project, and the largest ever solar project, the US$1.1 billion 2GW Al Dhafra solar farm in the United Arab Emirates.
“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,” BNEF chief executive Jon Moore said.
“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% of 2016 emissions are now under some form of net-zero commitment, up from 34% at the start of last year. This should drive increasing investment in the coming years.”
Australian investment in clean energy technologies was down slightly in 2020, with BloombergNEF estimating that the Australian clean energy market contracted by 7.8 per cent to US$5.9 billion (A$7.66 billion).
The vast majority of Australia’s clean tech investment was directed into the renewable energy space, attracting A$6.88 billion, with electric vehicles (A$520 million) and energy storage projects (A$130 million), contributing smaller amounts to Australia’s total.
According to BloombergNEF, it puts Australia on par with countries including Taiwan, South Korea, Poland, Chile, Turkey and Sweden, but lagging behind many smaller economies, including Vietnam, Spain and the Netherlands.
BloombergNEF said that the strong investment had been underpinned by continued growth in sustainable finance products, as sophisticated investors increasingly seek out opportunities to get a piece of the clean energy market.
Investments in electric vehicle companies increased dramatically in 2020, with BloombergNEF estimating that a massive US$28 billion was raised by EV companies through stock market listings, up from just US$1.6 billion in 2019.
BloombergNEF noted the value of venture capital investments in renewable energy and energy storage companies rose by more than 50 per cent in 2020, surging to US$5.9 billion globally. A further US$20 billion was raised by pure-play renewable energy and energy storage companies through new share issuances, a dramatic 249 per cent increase on 2019 levels.